Should You Consider Radware Ltd. (RDWR) For Your Portfolio?

The elite funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small-cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think of small-cap stocks. In this article, we take a closer look at Radware Ltd. (NASDAQ:RDWR) from the perspective of those elite funds.


Radware Ltd. (NASDAQ:RDWR) investors should pay attention to a decrease in support from the world’s most elite money managers in recent months, as ownership has fallen to 21. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Inteliquent Inc (NASDAQ:IQNT), MaxLinear, Inc. (NYSE:MXL), and Quotient Technology Inc (NYSE:QUOT) to gather more data points.

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At the moment there are several formulas stock market investors have at their disposal to appraise their stock investments. Some of the less utilized formulas are hedge fund and insider trading moves. we have shown that, historically, those who follow the best picks of the best investment managers can outclass the S&P 500 by a very impressive margin (see the details here).

Keeping this in mind, let’s take a gander at the fresh action encompassing Radware Ltd. (NASDAQ:RDWR).

How are hedge funds trading Radware Ltd. (NASDAQ:RDWR)?

Heading into Q4, a total of 21 of the hedge funds tracked by Insider Monkey were bullish in this stock, a decline of 5% from the previous quarter. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Richard Mashaal’s Rima Senvest Management had the number one position in Radware Ltd. (NASDAQ:RDWR), worth close to $57.2 million, amounting to 4.1% of its total 13F portfolio. The second-most bullish hedge fund manager is Cadian Capital, led by Eric Bannasch, holding a $35.3 million position; 1.3% of its 13F portfolio is allocated to the company. Some other peers that are bullish consist of Richard Mashaal’s Rima Senvest Management, John Brennan’s Sirios Capital Management, and George McCabe’s Portolan Capital Management.

Judging by the fact that Radware Ltd. (NASDAQ:RDWR) has experienced falling interest from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of fund managers that elected to cut their positions entirely last quarter. At the top of the heap, Jacob Gottlieb’s Visium Asset Management dropped the biggest investment of all the hedgies monitored by Insider Monkey, valued at about $5 million in stock, and Richard Driehaus of Driehaus Capital was right behind this move, as the fund manager dumped about $3 million worth of shares. These moves are important to note, as total hedge fund interest dropped by one fund last quarter.

Let’s check out hedge fund activity in other stocks similar to Radware Ltd. (NASDAQ:RDWR). These stocks are Inteliquent (NASDAQ:IQNT), MaxLinear, Inc. (NYSE:MXL), Quotient Technology Inc (NYSE:COUP), and Heartland Financial USA Inc (NASDAQ:HTLF). This group of stocks’ market values are closest to Radware Ltd. (NASDAQ:RDWR)’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IQNT 17 65612 3
MXL 24 177198 1
COUP 7 32237 -4
HTLF 8 11236 -1

As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $72 million. That figure was $160 millions in Radware Ltd. (NASDAQ:RDWR)’s case. MaxLinear, Inc. (NYSE:MXL) is the most popular stock in this table. On the other hand Quotient Technology Inc (NYSE:COUP) is the least popular one with only seven bullish hedge fund positions. Radware Ltd. (NASDAQ:RDWR) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard MaxLinear, Inc. (NYSE:MXL) might be a better candidate to consider a long position.