Here is What Hedge Funds Think About Infoblox Inc (BLOX)

Amid an overall market correction, many stocks that smart money investors were collectively bullish on tanked during the third quarter. Among them, Valeant and Micron ranked among the top 30 picks and both lost around 20%. Citigroup, which was the third most popular stock, lost 10% amid uncertainty regarding the interest rates. Nevertheless, our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.

Infoblox Inc (NYSE:BLOX) investors should be aware of a decrease in enthusiasm from smart money in recent months. Infoblox Inc (NYSE:BLOX) was in 24 hedge funds’ portfolios at the end of the third quarter of 2015. There were 29 hedge funds in our database with Infoblox Inc (NYSE:BLOX) holdings at the end of the previous quarter. At the end of this article, we will also compare Infoblox Inc (NYSE:BLOX) to other stocks, including Evolent Health Inc (NYSE:EVH), Genesis Healthcare Inc (NYSE:GEN), and Rush Enterprises, Inc. (NASDAQ:RUSHB) to get a better sense of its popularity.

In today’s marketplace, there are numerous methods investors use to evaluate publicly traded companies. Some of the less utilized methods are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the top picks of the elite money managers can outperform the market by a solid margin (see the details here).

With all of this in mind, we’re going to go over the key action surrounding Infoblox Inc (NYSE:BLOX).

What does the smart money think about Infoblox Inc (NYSE:BLOX)?

At the end of the third quarter, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a drop of 17% from one quarter earlier. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Cadian Capital, managed by Eric Bannasch, holds the largest position in Infoblox Inc (NYSE:BLOX). Cadian Capital has an $85.2 million position in the stock, comprising 3.1% of its 13F portfolio. Sitting at the No. 2 spot is Dorsal Capital Management, led by Ryan Frick and Oliver Evans, holding a $35.2 million position; 3.2% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that are bullish comprise Renaissance Technologies, Malcolm Fairbairn’s Ascend Capital, and Josh Resnick’s Jericho Capital Asset Management.

Judging by the fact that Infoblox Inc (NYSE:BLOX) has faced a declining sentiment from the smart money, logic holds that there exists a select few fund managers that decided to sell off their entire stakes by the end of the third quarter. Intriguingly, David Lamond’s Lamond Capital Partners dropped the biggest investment of the “upper crust” of funds followed by Insider Monkey, totaling close to $6.1 million in stock, and Josh Goldberg’s G2 Investment Partners Management was right behind this move, as the fund said goodbye to about $4.7 million worth of shares. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 5 funds by the end of the third quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Infoblox Inc (NYSE:BLOX) but similarly valued. We will take a look at Evolent Health Inc (NYSE:EVH), Genesis Healthcare Inc (NYSE:GEN), Rush Enterprises, Inc. (NASDAQ:RUSHB), and State Auto Financial (NASDAQ:STFC). This group of stocks’ market values resembles Infoblox Inc (NYSE:BLOX)’s market value.

As you can see, these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $29 million. That figure was $207 million in Infoblox Inc (NYSE:BLOX)’s case. Genesis Healthcare Inc (NYSE:GEN) is the most popular stock in this table. On the other hand, Rush Enterprises, Inc. (NASDAQ:RUSHB) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks, Infoblox Inc (NYSE:BLOX) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.