With the second-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the third quarter of 2021. One of these stocks was Fortinet Inc (NASDAQ:FTNT).
Fortinet Inc (NASDAQ:FTNT) was in 32 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 44. FTNT has experienced an increase in enthusiasm from smart money in recent months. There were 23 hedge funds in our database with FTNT positions at the end of the first quarter. Our calculations also showed that FTNT isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Louis Bacon Moore of Moore Capital
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Do Hedge Funds Think FTNT Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 32 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 39% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards FTNT over the last 24 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Fortinet Inc (NASDAQ:FTNT) was held by Renaissance Technologies, which reported holding $377.8 million worth of stock at the end of June. It was followed by Fundsmith LLP with a $179.1 million position. Other investors bullish on the company included Park West Asset Management, Two Sigma Advisors, and PEAK6 Capital Management. In terms of the portfolio weights assigned to each position Park West Asset Management allocated the biggest weight to Fortinet Inc (NASDAQ:FTNT), around 2.29% of its 13F portfolio. Prescott Group Capital Management is also relatively very bullish on the stock, earmarking 1.09 percent of its 13F equity portfolio to FTNT.
As aggregate interest increased, key money managers have been driving this bullishness. Bridgewater Associates, managed by Ray Dalio, established the most outsized position in Fortinet Inc (NASDAQ:FTNT). Bridgewater Associates had $13.5 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also made a $7.1 million investment in the stock during the quarter. The other funds with brand new FTNT positions are Louis Bacon’s Moore Global Investments, Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s now take a look at hedge fund activity in other stocks similar to Fortinet Inc (NASDAQ:FTNT). These stocks are Paychex, Inc. (NASDAQ:PAYX), Rocket Companies, Inc. (NYSE:RKT), Manulife Financial Corporation (NYSE:MFC), Cadence Design Systems Inc (NASDAQ:CDNS), The Travelers Companies Inc (NYSE:TRV), Phillips 66 (NYSE:PSX), and Okta, Inc. (NASDAQ:OKTA). This group of stocks’ market valuations are closest to FTNT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PAYX | 29 | 940182 | 4 |
| RKT | 13 | 115980 | -8 |
| MFC | 18 | 307415 | 1 |
| CDNS | 33 | 1623503 | 3 |
| TRV | 34 | 579032 | -1 |
| PSX | 26 | 295579 | 2 |
| OKTA | 57 | 2090544 | 9 |
| Average | 30 | 850319 | 1.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 30 hedge funds with bullish positions and the average amount invested in these stocks was $850 million. That figure was $851 million in FTNT’s case. Okta, Inc. (NASDAQ:OKTA) is the most popular stock in this table. On the other hand Rocket Companies, Inc. (NYSE:RKT) is the least popular one with only 13 bullish hedge fund positions. Fortinet Inc (NASDAQ:FTNT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FTNT is 53.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Hedge funds were also right about betting on FTNT as the stock returned 32.4% since the end of Q2 (through 10/15) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Fortinet Inc. (NASDAQ:FTNT)
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Disclosure: None. This article was originally published at Insider Monkey.
