In this article we will take a look at two recent moves made by Eric Bannasch’s Cadian Capital recently. According to a 13G filing with the SEC, Cadian Capital revealed it owns 9.2% of Infoblox Inc. (NYSE:BLOX) with 5.27 million shares, up by 596,100 shares increase compared to the previous stake. Meanwhile, another recently-amended 13G filing revealed that Cadian Capital currently owns 5.38 million shares of Qlik Technologies Inc. (NASDAQ:QLIK), which represent 5.8% of the company’s common stock, down from 8.27 million shares disclosed in its latest 13F filing.
Cadian Capital Management is a long/short equity hedge fund established by Eric Bannasch in 2007. The New York-based investment firm primarily focuses on the technology, media, and telecommunications sectors. Eric Bannasch had served as a portfolio manager at Perry Capital for the Technology, Media, and Telecommunications (TMT) sectors prior to launching his own firm. Bannasch’s event-driven hedge fund delivered a very strong performance, generating an annualized return of 11.95% with a 17.75% standard deviation since its inception in to January 2012. The fund’s most recent 13F filing reveals that Eric Bannasch and his team manage an equity portfolio with a value of $3.71 billion as of March 31, whereas the fund’s top ten holdings account for 58.94% of its entire portfolio.
We follow hedge funds like Cadian because our research has shown that their stock picks historically managed to generate alpha even though the filings are up to 45-days delayed. We used a 60-day delay in our back tests to be on the safe side and our research showed that the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Total Return Index by an average of 95 basis points per month between 1999 and 2012. After adjusting for risk, our calculations revealed that these stocks’ monthly alpha was 66 basis points. We have also been sharing and tracking the performance of these stocks since the end of August 2012, during which time they have returned 123%, outperforming the S&P 500 ETF by nearly 65 percentage points (see more details here).
Let’s start with Cadian’s investment in Infoblox Inc. (NYSE:BLOX). Infoblox is a technology company that delivers network control solutions and the fundamental technology that connects end users, devices, and networks. Just a few days ago, the technology company introduced Inflobox DDI for Amazon Web Services (AWS), which is a virtual appliance that extends the Infoblox solution for enterprise-grade network services and security to the AWS Cloud. Even though the aforementioned introduction might appear not quite comprehensible for most potential investors in the company, it is clear that Infoblox has been quite successful in developing and promoting its solutions thus far.