Throughout the daily news, we often run across stories of hackers stealing money electronically, or breaking into a database and lifting important information. If it was not for the companies that develop cybersecurity products, such kinds of stories may make headlines more often. In fact, in the era where IT is involved in essentially every aspect of our day-to-day lives, players like General Dynamics Corporation (NYSE:GD), EMC Corporation (NYSE:EMC), and Raytheon Company (NYSE:RTN) are generating solid revenues, and can be grouped together accordingly.
For example, in EMC’s quarterly financial report, it was revealed that the company earned about $232,300 from its RSA information security business, 12% higher than a year earlier.
Even though these numbers are relatively small compared to the overall revenue of EMC Corporation (NYSE:EMC), we must heed to COO David Goulden’s words about his company’s future: “With continued steady execution, we expect that EMC will achieve our previously stated longer-term potential of more than $30 billion in revenue in 2016 with non-GAAP EPS growth outpacing revenue growth during this timeframe,” and it’s safe to say that cybersecurity will be a key aspect of this boom.
With regard to General Dynamics Corporation (NYSE:GD), on the other hand, we can see that according to a statement issued by the company itself, first-quarter revenue from information systems and technology, (which includes cybersecurity) amounted to some $2.4 billion.
Now, investment opportunities in this space could be screened by metrics such as P/E multiples, PEG ratios, or dividend yield, among others, but one key indicator that flies under the radar is hedge fund sentiment. Empirical analysis has shown that piggyback investors can generate market outperformance if they know where to look, to the tune of 18 percentage points each year; see the details for yourself.
With that being said, we’ve compiled a list of hedge funds’ top ten cybersecurity stocks, which include EMC Corporation (NYSE:EMC) and General Dynamics Corporation (NYSE:GD), to see where the smart money is placing their capital.
Continue reading the list on the following pages:
1. EMC Corporation (NYSE:EMC)
Number of HFs in Q4: 58
Number of HFs in Q3: 64
YTD Return: -11.23%
Prominent hedge funds invested: Bain Capital’s Brookside Capital, Lee Ainslie’s Maverick Capital, and Thomas Steyer’s Farallon Capital
2. General Dynamics Corporation (NYSE:GD)
Number of HFs in Q4: 37
Number of HFs in Q3: 38
YTD Return: 6.51%
Prominent hedge funds invested: James A. Star’s Longview Asset Management, Warren Buffett’s Berkshire Hathaway, and Ken Griffin’s Citadel Investment Group
3. Symantec Corporation (NASDAQ:SYMC)
Number of HFs in Q4: 28
Number of HFs in Q3: 31
YTD Return: 29.38%
Prominent hedge funds invested: Ken Griffin’s Citadel Investment Group, Steven Cohen’s Sac Capital Advisors, and Dan Loeb’s Third Point
4. Check Point Software Technologies Ltd. (NASDAQ:CHKP)
Number of HFs in Q4: 27
Number of HFs in Q3: 26
YTD Return: -2.29%
Prominent hedge funds invested: Thomas Steyer’s Farallon Capital, David Cohen & Harold Levy’s Iridian Asset Management, Martin D. Sass’s Md Sass
5. Fortinet Inc (NASDAQ:FTNT)
Number of HFs in Q4: 26
Number of HFs in Q3: 30
YTD Return: -15.13%
Prominent hedge funds invested: Scott Burney’s Bluefin Investment Management, Stuart Peterson’s Artis Capital Management
6. Raytheon Company (NYSE:RTN)
Number of HFs in Q4: 24
Number of HFs in Q3: 23
YTD Return: 7.12%
Prominent hedge funds invested: Phill Gross & Robert Atchinson’s Adage Capital Management, Cliff Asness’s Aqr Capital Management, and David Harding’s Winton Capital Management
7 (tie). Websense Inc. (NASDAQ:WBSN)
Number of HFs in Q4: 14
Number of HFs in Q3: 14
YTD Return: 15.03%
Prominent hedge funds invested: David Dreman’s Dreman Value Management, Jeffrey Smith’s Starboard Value Lp, and Clint Carlson’s Carlson Capital
7 (tie). Sourcefire, Inc. (NASDAQ:FIRE)
Number of HFs in Q4: 14
Number of HFs in Q3: 16
YTD Return: 8.7%
Prominent hedge funds invested: Israel Englander’s Millennium Management, Brian Ashford-Russell & Tim Woolley’s Polar Capital, and Van Schreiber’s Bennett Lawrence Management
9. Palo Alto Networks Inc (NYSE:PANW)
Number of HFs in Q4: 13
Number of HFs in Q3: 11
YTD Return: -3.44%
Prominent hedge funds invested: Bain Capital’s Brookside Capital, Noam Gottesman’s GLG Partners, and Jim Simons’s Renaissance Technologies
10. Guidance Software, Inc. (NASDAQ:GUID)
Number of HFs in Q4: 8
Number of HFs in Q3: 8
YTD Return: -14.7%
Prominent hedge funds invested: Mario Gabelli’s GAMCO Investors, Ken Griffin’s Citadel Investment Group, and John Zaro’s Bourgeon Capital
Disclosure: none
