Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards F5, Inc. (NASDAQ:FFIV).
Is F5, Inc. (NASDAQ:FFIV) going to take off soon? Hedge funds were getting less optimistic. The number of bullish hedge fund bets were cut by 3 recently. F5, Inc. (NASDAQ:FFIV) was in 27 hedge funds’ portfolios at the end of September. The all time high for this statistic is 39. Our calculations also showed that FFIV isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind we’re going to go over the new hedge fund action encompassing F5, Inc. (NASDAQ:FFIV).
Cliff Asness of AQR Capital Management
Do Hedge Funds Think FFIV Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -10% from the second quarter of 2021. By comparison, 36 hedge funds held shares or bullish call options in FFIV a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in F5, Inc. (NASDAQ:FFIV) was held by Renaissance Technologies, which reported holding $305.7 million worth of stock at the end of September. It was followed by Holocene Advisors with a $90.3 million position. Other investors bullish on the company included Arrowstreet Capital, Citadel Investment Group, and AQR Capital Management. In terms of the portfolio weights assigned to each position Te Ahumairangi Investment Management allocated the biggest weight to F5, Inc. (NASDAQ:FFIV), around 1.28% of its 13F portfolio. Holocene Advisors is also relatively very bullish on the stock, earmarking 0.49 percent of its 13F equity portfolio to FFIV.
Due to the fact that F5, Inc. (NASDAQ:FFIV) has witnessed falling interest from hedge fund managers, we can see that there was a specific group of money managers who were dropping their positions entirely last quarter. At the top of the heap, Michael Rockefeller and KarláKroeker’s Woodline Partners dumped the biggest stake of all the hedgies followed by Insider Monkey, valued at about $19.7 million in call options. Mikal Patel’s fund, Oribel Capital Management, also dropped its call options, about $9.6 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 3 funds last quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as F5, Inc. (NASDAQ:FFIV) but similarly valued. These stocks are Medical Properties Trust, Inc. (NYSE:MPW), Sasol Limited (NYSE:SSL), Steel Dynamics, Inc. (NASDAQ:STLD), Marqeta Inc. (NASDAQ:MQ), Formula One Group (NASDAQ:FWONK), PulteGroup, Inc. (NYSE:PHM), and Graco Inc. (NYSE:GGG). This group of stocks’ market caps are similar to FFIV’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MPW | 18 | 365527 | -1 |
| SSL | 4 | 76164 | -1 |
| STLD | 23 | 481466 | -3 |
| MQ | 20 | 1100795 | -15 |
| FWONK | 40 | 1901404 | -1 |
| PHM | 35 | 771756 | 1 |
| GGG | 32 | 258259 | 8 |
| Average | 24.6 | 707910 | -1.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.6 hedge funds with bullish positions and the average amount invested in these stocks was $708 million. That figure was $686 million in FFIV’s case. Formula One Group (NASDAQ:FWONK) is the most popular stock in this table. On the other hand Sasol Limited (NYSE:SSL) is the least popular one with only 4 bullish hedge fund positions. F5, Inc. (NASDAQ:FFIV) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FFIV is 54.7. 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 31.1% in 2021 through December 9th and still beat the market by 5.1 percentage points. Hedge funds were also right about betting on FFIV as the stock returned 14.2% since the end of Q3 (through 12/9) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow F5 Inc. (NASDAQ:FFIV)
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Disclosure: None. This article was originally published at Insider Monkey.
