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This Hot Sector May Be The Next Biotech: Here’s What Hedge Funds Think Of Its Top Companies Like FireEye Inc (FEYE)

Palo Alto Networks Inc (NYSE:PANW), not surprisingly based in California, was founded in 2005 by Nir Zuk and went public during the summer of 2012 through an initial public offering (IPO). Since then the stock has increased by 240% and is up by 47.4% year-to-date. The results for the company’s fiscal third quarter of 2015, landed it another earnings beat, its fourth in a row. Besides reporting lower losses per share than expected, revenue grew 55% year-over-year, while it also detailed improving market share for is services. Exactly as its peers, Palo Alto Network is also active on the M&A front, acquiring startup CirroSecure during the spring, and Morta Security and Cyvera last year. Christopher Lord’s Criterion Capital decreased its holding in Palo Alto Networks Inc (NYSE:PANW) by 42% during the first quarter, but maintains a large position of 1.02 million shares with a value of $148.75 million. Columbus Circle Investors on the other hand added shares to its own holding, leaving it with a stake of 786,387 shares. Overall, hedge fund ownership in this stock also increased during the first quarter, to 47 funds in our database from 43, and with total investment climbing to $953 million from $793 million.

Last on our list is Fortinet Inc (NASDAQ:FTNT), another hot stock this year, having increased 39.9% year-to-date and 81.6% during the last year. Fortinet Inc was founded by brothers Ken and Michael Xie in 2000, and like the other stocks on our list, is also based in California. Fortinet Inc (NASDAQ:FTNT) has also been active on the M&A market, announcing in May that it had acquired California-based Meru Networks (NASDAQ:MERU). The market for cyber security is likely to see more and more acquisitions, and it is probably going out on a limb to suggest one or all of the three companies discussed here will be involved. Ken Griffin decreased his stake in Fortinet Inc during the first quarter of 2015 by 19% to 3.21 million shares, while Donald Chiboucis increased his stake by 39% to 3.17 million shares. Chiboucis’ Columbus Circle Investors is clearly bullish on the sector, also owning a stake of 608,766 shares with a value of $23.89 million in FireEye. However, funds we track were not as optimistic about Fortinet as they were the previous two security firms, with fund ownership in Fortinet dropping to 28 from 33 during the first quarter, and aggregate investment sliding to $349 million from $397 million.

Disclosure: None

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