Palo Alto Networks Inc (PANW), athenahealth, Inc (ATHN) & More: Hedge Fund Criterion Capital’s Small Cap Picks

Robert Half International Inc. (NYSE:RHI) was another of Criterion’s small cap picks; the investment team initiated a position of 1.6 million shares in the staffing company. Robert Half’s earnings rose 16% in the first quarter of 2013 versus a year earlier, but revenue was essentially flat. The stock carries trailing and forward earnings multiples of 21 and 15, respectively, so the market is expecting high earnings growth here as well. Billionaire Ken Griffin’s Citadel Investment Group was also buying Robert Half International Inc. (NYSE:RHI), and owned 2.8 million shares at the end of Q4 (check out Griffin’s stock picks).

The fund disclosed ownership of 1.5 million shares of Splunk Inc (NASDAQ:SPLK), a $4.2 billion market cap cloud software company. Splunk Inc (NASDAQ:SPLK) is slightly unprofitable on a trailing basis, though it did report low profits in its most recent quarterly report (a report which also recorded 51% revenue growth compared to the same period in the previous fiscal year). The sell-side is projecting 11 cents in EPS for the forward fiscal year, and so the forward P/E is very high here as well. SAC Capital Advisors, managed by billionaire Steve Cohen, initiated a small position per its own 13F (find Cohen’s favorite stocks).

Criterion owned 2.9 million shares of intellectual property software company Cadence Design Systems Inc (NASDAQ:CNDS), a 79% increase from what it had owned at the end of September. This company actually trades at only 14 times forward earnings estimates, and analysts expect earnings to grow over the next several years with the result being a five-year PEG ratio of 0.8. Sales rose 12% in its last quarterly report compared to the fourth quarter of 2011. Donald Chiboucis’s Columbus Circle Investors was another major shareholder in Cadence Design Systems Inc (NASDAQ:CNDS) (research more stocks Columbus Circle owns).

Disclosure: I own no shares of any stocks mentioned in this article.