Hedge Funds Have Never Been This Bullish On Palo Alto Networks Inc (PANW)

After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Palo Alto Networks Inc (NASDAQ:PANW).

Palo Alto Networks Inc (NASDAQ:PANW) shareholders have witnessed an increase in support from the world’s most elite money managers lately. Palo Alto Networks Inc (NASDAQ:PANW) was in 73 hedge funds’ portfolios at the end of September. The all time high for this statistic was previously 69. This means the bullish number of hedge fund positions in this stock currently sits at its new all time high. Our calculations also showed that PANW 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. Keeping this in mind let’s take a peek at the key hedge fund action surrounding Palo Alto Networks Inc (NASDAQ:PANW).

David Blood of Generation Investment Management

Do Hedge Funds Think PANW Is A Good Stock To Buy Now?

At third quarter’s end, a total of 73 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the second quarter of 2021. On the other hand, there were a total of 59 hedge funds with a bullish position in PANW a year ago. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

Among these funds, Generation Investment Management held the most valuable stake in Palo Alto Networks Inc (NASDAQ:PANW), which was worth $773.4 million at the end of the third quarter. On the second spot was Viking Global which amassed $610.1 million worth of shares. Citadel Investment Group, Jericho Capital Asset Management, and Two Sigma Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Crosslink Capital allocated the biggest weight to Palo Alto Networks Inc (NASDAQ:PANW), around 13.82% of its 13F portfolio. Jericho Capital Asset Management is also relatively very bullish on the stock, earmarking 11.17 percent of its 13F equity portfolio to PANW.

As aggregate interest increased, some big names have been driving this bullishness. Jericho Capital Asset Management, managed by Josh Resnick, created the most valuable position in Palo Alto Networks Inc (NASDAQ:PANW). Jericho Capital Asset Management had $408.6 million invested in the company at the end of the quarter. Edmond M. Safra’s EMS Capital also made a $82.1 million investment in the stock during the quarter. The other funds with brand new PANW positions are Israel Englander’s Millennium Management, Chris Rokos’s Rokos Capital Management, and Michael Rockefeller and KarláKroeker’s Woodline Partners.

Let’s check out hedge fund activity in other stocks similar to Palo Alto Networks Inc (NASDAQ:PANW). We will take a look at IHS Markit Ltd. (NYSE:INFO), Global Payments Inc (NYSE:GPN), IQVIA Holdings, Inc. (NYSE:IQV), Synopsys, Inc. (NASDAQ:SNPS), BCE Inc. (NYSE:BCE), eBay Inc (NASDAQ:EBAY), and Palantir Technologies Inc. (NYSE:PLTR). All of these stocks’ market caps match PANW’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 48.6 hedge funds with bullish positions and the average amount invested in these stocks was $2878 million. That figure was $5900 million in PANW’s case. Global Payments Inc (NYSE:GPN) is the most popular stock in this table. On the other hand BCE Inc. (NYSE:BCE) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Palo Alto Networks Inc (NASDAQ:PANW) is more popular among hedge funds. Our overall hedge fund sentiment score for PANW is 89. 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 returned 28.6% in 2021 through November 30th but still managed to beat the market by 5.6 percentage points. Hedge funds were also right about betting on PANW as the stock returned 14.2% since the end of September (through 11/30) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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Disclosure: None. This article was originally published at Insider Monkey.