F5 Networks, Inc. (NASDAQ:FFIV) was in 23 hedge funds’ portfolio at the end of the fourth quarter of 2012. FFIV shareholders have witnessed a decrease in hedge fund interest in recent months. There were 24 hedge funds in our database with FFIV holdings at the end of the previous quarter.
In the eyes of most investors, hedge funds are perceived as worthless, old financial vehicles of years past. While there are over 8000 funds in operation at present, we at Insider Monkey choose to focus on the moguls of this club, about 450 funds. It is estimated that this group oversees the lion’s share of the hedge fund industry’s total capital, and by tracking their best picks, we have formulated a few investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum 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 trumped the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).
Just as important, bullish insider trading sentiment is a second way to parse down the world of equities. As the old adage goes: there are lots of motivations for a bullish insider to cut shares of his or her company, but just one, very obvious reason why they would buy. Various empirical studies have demonstrated the valuable potential of this strategy if piggybackers know what to do (learn more here).
With all of this in mind, we’re going to take a gander at the recent action encompassing F5 Networks, Inc. (NASDAQ:FFIV).
How are hedge funds trading F5 Networks, Inc. (NASDAQ:FFIV)?
At the end of the fourth quarter, a total of 23 of the hedge funds we track were bullish in this stock, a change of -4% from the previous quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings considerably.
Of the funds we track, Lee Ainslie’s Maverick Capital had the most valuable position in F5 Networks, Inc. (NASDAQ:FFIV), worth close to $83.6 million, comprising 1.2% of its total 13F portfolio. On Maverick Capital’s heels is Cadian Capital, managed by Eric Bannasch, which held a $53.5 million position; the fund has 1.7% of its 13F portfolio invested in the stock. Remaining hedge funds that are bullish include Ryan Frick and Oliver Evans’s Dorsal Capital Management, Jim Simons’s Renaissance Technologies and D. E. Shaw’s D E Shaw.
Since F5 Networks, Inc. (NASDAQ:FFIV) has faced declining sentiment from the entirety of the hedge funds we track, it’s safe to say that there were a few fund managers that decided to sell off their full holdings last quarter. At the top of the heap, John Overdeck and David Siegel’s Two Sigma Advisors said goodbye to the largest position of the 450+ funds we watch, comprising an estimated $5.5 million in stock.. George Soros’s fund, Soros Fund Management, also said goodbye to its stock, about $5.2 million worth. These transactions are important to note, as total hedge fund interest fell by 1 funds last quarter.
Insider trading activity in F5 Networks, Inc. (NASDAQ:FFIV)
Insider buying is most useful when the primary stock in question has experienced transactions within the past 180 days. Over the last 180-day time period, F5 Networks, Inc. (NASDAQ:FFIV) has seen zero unique insiders purchasing, and 9 insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity in other stocks similar to F5 Networks, Inc. (NASDAQ:FFIV). These stocks are Catamaran Corp (USA) (NASDAQ:CTRX), Workday Inc (NYSE:WDAY), Red Hat, Inc. (NYSE:RHT), Nuance Communications Inc. (NASDAQ:NUAN), and BMC Software, Inc. (NASDAQ:BMC). All of these stocks are in the application software industry and their market caps match FFIV’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Catamaran Corp (USA) (NASDAQ:CTRX)||20||0||0|
|Workday Inc (NYSE:WDAY)||20||0||0|
|Red Hat, Inc. (NYSE:RHT)||25||0||6|
|Nuance Communications Inc. (NASDAQ:NUAN)||17||0||6|
|BMC Software, Inc. (NASDAQ:BMC)||19||0||8|
With the returns exhibited by Insider Monkey’s time-tested strategies, retail investors must always monitor hedge fund and insider trading sentiment, and F5 Networks, Inc. (NASDAQ:FFIV) applies perfectly to this mantra.