Are Cybersecurity Stocks Falling Out of Favor With Hedge Funds?

#2. Check Point Software Technologies Ltd. (NASDAQ:CHKP)

– Investors with long positions as of March 31: 31

– Aggregate value of investors’ long positions as of March 31: $1.15 Billion

Check Point Software Technologies Ltd. (NASDAQ:CHKP) fell out of favor with the hedge fund managers tracked by Insider Monkey during the January-to-March period, as the number of money managers invested in the information security company dropped to 31 from 33 quarter-on-quarter. At the same time, the value of those managers’ equity investments shrunk to $1.14 billion from $1.39 billion during the first three months of the year. The 31 money managers stockpiled 7% of the company’s total number of outstanding shares. Check Point Software Technologies has been successful in growing in top- and bottom-line figures in recent years, with the company’s revenues increasing to $1.63 billion in 2015 from $1.50 billion in 2014 and $1.39 billion in 2013. The company is on track to deliver stronger revenues for yet another consecutive year, as first-quarter revenues increased 9% year-over-year to $404 million. The shares of the company are 5% in the green year-to-date. Iridian Asset Management, founded by David Cohen and Harold Levy, reported ownership of 5.26 million shares of Check Point Software Technologies Ltd. (NASDAQ:CHKP) in its latest 13F.

#1. Palo Alto Networks Inc. (NYSE:PANW)

– Investors with long positions as of March 31: 42

– Aggregate value of investors’ long positions as of March 31: $956.00 Million

Palo Alto Networks Inc. (NYSE:PANW) also lost some of its appeal within the hedge fund industry, after the number of asset managers from our database with stakes in the company fell to 42 from 50 during the March quarter. Correspondingly, the overall value of those asset managers’ stakes declined to $956.00 million from a much higher value of $1.15 billion during the quarter. Those 42 hedge fund vehicles accumulated nearly 7% of the company’s outstanding shares. Shares of the network-security company plummeted following the release of its earnings report for the third quarter of fiscal 2016 that ended April 30 despite posting a higher-than-expected top-line figure. The downbeat outlook for the fourth quarter of fiscal 2016 was the primary disappointment for investors. The company anticipates total revenue in the range of $386 million-to-$390 million, which represents a growth of “only” 36%-to-37%. This range would mark the slowest quarterly rate of revenue growth since Palo Alto Networks went public in 2012. The disappointing outlook overshadowed the better-than-anticipated 48% year-over-year increase in third-quarter revenue, which totaled $345.8 million. Jim Simons’ Renaissance Technologies has 931,300 shares of Palo Alto Networks Inc. (NYSE:PANW) in its equity portfolio as of March 31.

Disclosure: None