Is Check Point Software Technologies (CHKP) Going to Burn These Hedge Funds?

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Check Point Software Technologies Ltd. (NASDAQ:CHKP), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Is Check Point Software Technologies Ltd. (NASDAQ:CHKP) worth your attention right now? Hedge funds were taking an optimistic view. The number of long hedge fund positions went up by 1 lately. Check Point Software Technologies Ltd. (NASDAQ:CHKP) was in 30 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 35. Our calculations also showed that CHKP isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 29 hedge funds in our database with CHKP holdings at the end of June.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind let’s take a glance at the key hedge fund action regarding Check Point Software Technologies Ltd. (NASDAQ:CHKP).

Brad Farber Atika Capital

Brad Farber of Atika Capital

Do Hedge Funds Think CHKP Is A Good Stock To Buy Now?

At Q3’s end, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CHKP over the last 25 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).

More specifically, Two Sigma Advisors was the largest shareholder of Check Point Software Technologies Ltd. (NASDAQ:CHKP), with a stake worth $123 million reported as of the end of September. Trailing Two Sigma Advisors was Arrowstreet Capital, which amassed a stake valued at $110.8 million. Alyeska Investment Group, D E Shaw, and Renaissance Technologies were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Te Ahumairangi Investment Management allocated the biggest weight to Check Point Software Technologies Ltd. (NASDAQ:CHKP), around 1.81% of its 13F portfolio. SG Capital Management is also relatively very bullish on the stock, designating 1.61 percent of its 13F equity portfolio to CHKP.

As industrywide interest jumped, specific money managers were leading the bulls’ herd. Intrinsic Edge Capital, managed by Mark Coe, established the largest position in Check Point Software Technologies Ltd. (NASDAQ:CHKP). Intrinsic Edge Capital had $12.6 million invested in the company at the end of the quarter. Brad Farber’s Atika Capital also initiated a $6.3 million position during the quarter. The other funds with new positions in the stock are Ken Grossman and Glen Schneider’s SG Capital Management, Michael Rockefeller and KarláKroeker’s Woodline Partners, and Phil Frohlich’s Prescott Group Capital Management.

Let’s now take a look at hedge fund activity in other stocks similar to Check Point Software Technologies Ltd. (NASDAQ:CHKP). These stocks are Doximity Inc. (NYSE:DOCS), Franklin Resources, Inc. (NYSE:BEN), Masimo Corporation (NASDAQ:MASI), Logitech International SA (NASDAQ:LOGI), FactSet Research Systems Inc. (NYSE:FDS), Huazhu Group Limited (NASDAQ:HTHT), and Camden Property Trust (NYSE:CPT). This group of stocks’ market caps are similar to CHKP’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
DOCS 19 554548 -16
BEN 28 359424 -2
MASI 31 560090 3
LOGI 20 400160 0
FDS 28 775126 0
HTHT 28 775810 1
CPT 23 419856 2
Average 25.3 549288 -1.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.3 hedge funds with bullish positions and the average amount invested in these stocks was $549 million. That figure was $621 million in CHKP’s case. Masimo Corporation (NASDAQ:MASI) is the most popular stock in this table. On the other hand Doximity Inc. (NYSE:DOCS) is the least popular one with only 19 bullish hedge fund positions. Check Point Software Technologies Ltd. (NASDAQ:CHKP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CHKP is 77.5. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately CHKP wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CHKP were disappointed as the stock returned -1.5% since the end of September (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.