Is Riverbed Technology, Inc. (NASDAQ:RVBD) an attractive investment today? Hedge funds are getting less bullish. The number of bullish hedge fund positions stayed the same which is a slightly negative development in our experience
If you'd ask most market participants, hedge funds are perceived as unimportant, old financial vehicles of yesteryear. While there are greater than 8000 funds trading at present, we look at the upper echelon of this club, about 450 funds. It is estimated that this group controls the majority of all hedge funds' total capital, and by keeping an eye on their top picks, we have formulated a few investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we've began to sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).
Just as integral, optimistic insider trading activity is a second way to break down the investments you're interested in. There are a number of incentives for an upper level exec to sell shares of his or her company, but only one, very simple reason why they would buy. Several empirical studies have demonstrated the useful potential of this tactic if shareholders understand where to look (learn more here).
Keeping this in mind, it's important to take a look at the recent action regarding Riverbed Technology, Inc. (NASDAQ:RVBD).
At the end of the first quarter, a total of 24 of the hedge funds we track held long positions in this stock, a change of 0% from one quarter earlier. With hedgies' sentiment swirling, there exists a few notable hedge fund managers who were increasing their holdings meaningfully.
When looking at the hedgies we track, Valinor Management LLC, managed by David Gallo, holds the largest position in Riverbed Technology, Inc. (NASDAQ:RVBD). Valinor Management LLC has a $70.7 million position in the stock, comprising 3.1% of its 13F portfolio. On Valinor Management LLC's heels is Dorsal Capital Management, managed by Ryan Frick and Oliver Evans, which held a $28.3 million position; the fund has 3.9% of its 13F portfolio invested in the stock. Some other peers that are bullish include Paul Singer's Elliott Management, Jim Simons's Renaissance Technologies and Ahmet Okumus's Okumus Fund Management.
Judging by the fact that Riverbed Technology, Inc. (NASDAQ:RVBD) has witnessed a declination in interest from the smart money, it's easy to see that there exists a select few fund managers who sold off their entire stakes in Q1. Interestingly, Robert Emil Zoellner's Alpine Associates cut the biggest stake of the "upper crust" of funds we key on, worth about $16.2 million in stock., and SAC Subsidiary of Sigma Capital Management was right behind this move, as the fund sold off about $7.9 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Insider trading activity, especially when it's bullish, is best served when the company in focus has experienced transactions within the past six months. Over the last six-month time frame, Riverbed Technology, Inc. (NASDAQ:RVBD) has experienced zero unique insiders buying, and 6 insider sales (see the details of insider trades here).
Let's go over hedge fund and insider activity in other stocks similar to Riverbed Technology, Inc. (NASDAQ:RVBD). These stocks are Super Micro Computer, Inc. (NASDAQ:SMCI), Juniper Networks, Inc. (NYSE:JNPR), Finisar Corporation (NASDAQ:FNSR), Palo Alto Networks Inc (NYSE:PANW), and Aruba Networks, Inc. (NASDAQ:ARUN). This group of stocks are the members of the networking & communication devices industry and their market caps are similar to RVBD's market cap.