Over the past few years, numerous U.S. firms reported breaches to their cybersecurity, including high profile cases, such as the recent attack carried out against Sony Pictures Entertainment. The IT security industry has benefited greatly from this increase in cyber-attacks, since governments and business are spending more and more money to protect sensitive information. Hence, it comes as no surprise that cyber security companies are becoming increasingly popular among investors, as the market is expected to continue growing at an accelerated pace. In the following article we will take a closer look at Fortinet Inc (NASDAQ:FTNT), Check Point Software Technologies Ltd. (NASDAQ:CHKP), and Palo Alto Networks Inc (NYSE:PANW), which are three IT security stocks hedge funds have been betting on as of late.
According to our data, 33 hedge funds hold a stake in Fortinet Inc (NASDAQ:FTNT). As of the end of last quarter, eight investment firms disclosed new stakes in the company, including Steve Cohen’s Point72 Asset Management, which owns 167,800 shares. Furthermore, Ken Griffin’s Citadel Investment Group was among the seven hedge funds that increased their exposure to the stock during the fourth quarter, boosting its holding by 97% to 3.96 million shares. Other major hedge funds betting on the Sunnyvale, California-based company include Cliff Asness’ AQR Capital Management, Jim Simons’ Renaissance Technologies, and Donald Chiboucis’ Columbus Circle Investors. In addition to hedge funds, Wall Street analysts are also optimistic regarding Fortinet Inc (NASDAQ:FTNT). Analysts at Oppenheimer for example have issued an “outperform” rating on the stock and set a price target of $39.00 per share. After gaining around 46% over the past 52 weeks, the stock is currently trading at $34.85 per share as of Wednesday morning.
Check Point Software Technologies Ltd. (NASDAQ:CHKP) is another IT security company that have become increasingly popular among investors. Among the firms we track, a total of 29 hedge funds have a stake in the company, holding around $1.35 billion worth of stock. While 11 investment firms initiated new positions in the company last quarter, 6 other funds increased their exposure to the stock. David Blood and Al Gore’s Generation Investment Management is one of the IT security firm’s largest shareholders among institutional investors, holding 7.10 million shares, valued at approximately $558.4 million. Furthermore, Ken Griffin’s Citadel Investment Group drastically increased its stake in the company during the fourth quarter and now owns 1.83 million shares. Check Point Software Technologies Ltd. (NASDAQ:CHKP) is currently trading at $83.25 per share, after gaining around 20.7% over the past 52 weeks. Furthermore, the company is not only active in the US, but also has a large international exposure, making it a worldwide leader in the IT security industry.
Palo Alto Networks Inc (NYSE:PANW) appeared in the equity portfolio of 43 hedge funds, out of the 737 we track, and is thus the most popular of the three stocks. The company’s largest shareholders among institutional investors are Christopher Lord’s Criterion Capital, with 1.74 million shares, and Christopher Medlock James’ Partner Fund Management, with 661,200 shares. While these two investment firms reduced their exposure to the stock last quarter, 12 other hedge funds entered a new position in the company. Among them was Donald Chiboucis’ Columbus Circle Investors, which acquired 101,900 shares, valued at $12.49 million. Much to the delight of its bulls, Palo Alto Networks Inc (NYSE:PANW) gained a whopping 112% last year, and reached a 52-week high of $149.35 per share this March. Palo Alto is one of the best-performing tech stocks over the past 6 months, thanks to the 46% increase in share price achieved during this period. This trend is expected to persist in the future, as Palo Alto continues to expand its customer base, protecting thousands of companies, governments, and service providers through its unique security platform.
Tracking the activity of hedge funds is a great way to identify profitable investments that will help you beat the market. Here at Insider Monkey, we gather information regarding stock picks made by these investment firms and analyze their equity portfolios. However, the largest positions in the equity portfolio of hedge funds, do not always represent the great investment ideas, since large-cap stocks tend to deliver meager returns. Small-cap stocks on the other hand, such as some of the equities mentioned in this article, offer far greater returns. The small-cap hedge fund strategy we have devised -which is based on the hedge fund filings- returned 28.2% in 2014, 53.2% in 2013, and 33.3% in 2012.