Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.
Infoblox Inc (NYSE:BLOX) investors should be aware of an increase in hedge fund sentiment lately. There were 29 hedge funds in our system with BLOX shares on September 30, up from 25 on June 30. At the end of this article we will also compare BLOX to other stocks including Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN), Multi-Color Corporation (NASDAQ:LABL), and Abaxis Inc (NASDAQ:ABAX) to get a better sense of its popularity.
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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Hedge fund activity in Infoblox Inc (NYSE:BLOX)
Heading into the fourth quarter of 2016, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a jump of 16% from one quarter earlier, pushing hedge fund ownership to its highest point in the last quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Starboard Value LP, managed by Jeffrey Smith, holds the largest position in Infoblox Inc (NYSE:BLOX). The activist fund has a $73.8 million position in the stock, comprising 2% of its 13F portfolio. Sitting at the No. 2 spot is Jim Simons’ Renaissance Technologies holding a $46 million position. Other professional money managers that hold long positions encompass Ryan Frick and Oliver Evans’ Dorsal Capital Management, Matthew Knauer and Mina Faltas’ Nokota Management, and Jonathan Auerbach’s Hound Partners.
As one would reasonably expect, key hedge funds have jumped into Infoblox Inc (NYSE:BLOX) headfirst. Glazer Capital, managed by Paul Glazer, initiated the largest position in Infoblox Inc (NYSE:BLOX). The fund reportedly had $23.1 million invested in the company at the end of the quarter. Robert Emil Zoellner’s Alpine Associates also made a $20.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Gordy Holterman and Derek Dunn’s Overland Advisors, Simon Davies’ Sand Grove Capital Partners, and Noam Gottesman’s GLG Partners.
Let’s now review hedge fund activity in other stocks similar to Infoblox Inc (NYSE:BLOX). We will take a look at Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN), Multi-Color Corporation (NASDAQ:LABL), Abaxis Inc (NASDAQ:ABAX), and Redwood Trust, Inc. (NYSE:RWT). This group of stocks’ market values are similar to BLOX’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ACHN | 27 | 348980 | 5 |
| LABL | 7 | 45924 | 3 |
| ABAX | 8 | 26481 | -2 |
| RWT | 11 | 141284 | 0 |
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $141 million. That figure was $438 million in BLOX’s case. Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) is the most popular stock in this table. On the other hand Multi-Color Corporation (NASDAQ:LABL) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Infoblox Inc (NYSE:BLOX) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None
