The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, when the S&P 500 Index was trading around the 4300 level. Since then investors decided to bet on the economic recovery and a stock market rebound even though we experienced a temporary correction in January. In this article you are going to find out whether hedge funds thought Arista Networks Inc (NYSE:ANET) was a good investment heading into the fourth quarter and how the stock traded in comparison to the top hedge fund picks.
Is Arista Networks Inc (NYSE:ANET) a buy right now? The smart money was becoming less confident. The number of bullish hedge fund positions retreated by 3 in recent months. Arista Networks Inc (NYSE:ANET) was in 32 hedge funds’ portfolios at the end of September. The all time high for this statistic is 35. Our calculations also showed that ANET 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 check out the key hedge fund action encompassing Arista Networks Inc (NYSE:ANET).
Joel Greenblatt of Gotham Asset Management
Do Hedge Funds Think ANET Is A Good Stock To Buy Now?
At the end of September, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a change of -9% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ANET over the last 25 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
More specifically, Point72 Asset Management was the largest shareholder of Arista Networks Inc (NYSE:ANET), with a stake worth $154.1 million reported as of the end of September. Trailing Point72 Asset Management was Renaissance Technologies, which amassed a stake valued at $75.6 million. Citadel Investment Group, Millennium 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 Boardman Bay Capital Management allocated the biggest weight to Arista Networks Inc (NYSE:ANET), around 3.07% of its 13F portfolio. Shellback Capital is also relatively very bullish on the stock, designating 1.6 percent of its 13F equity portfolio to ANET.
Since Arista Networks Inc (NYSE:ANET) has witnessed declining sentiment from hedge fund managers, it’s safe to say that there is a sect of hedge funds who were dropping their positions entirely in the third quarter. Interestingly, Michael Rockefeller and KarláKroeker’s Woodline Partners dumped the biggest stake of all the hedgies followed by Insider Monkey, valued at about $15.6 million in stock. Richard SchimeláandáLawrence Sapanski’s fund, Cinctive Capital Management, also cut its stock, about $8.9 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 3 funds in the third quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Arista Networks Inc (NYSE:ANET). These stocks are Etsy Inc (NASDAQ:ETSY), V.F. Corporation (NYSE:VFC), Deutsche Bank Aktiengesellschaft (NYSE:DB), Peloton Interactive, Inc. (NASDAQ:PTON), Best Buy Co., Inc. (NYSE:BBY), Interactive Brokers Group, Inc. (NASDAQ:IBKR), and Energy Transfer L.P. (NYSE:ET). This group of stocks’ market values are similar to ANET’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ETSY | 47 | 1435748 | 0 |
| VFC | 23 | 284894 | -9 |
| DB | 15 | 1795111 | -5 |
| PTON | 62 | 4634220 | -5 |
| BBY | 29 | 679878 | 2 |
| IBKR | 31 | 1477413 | -5 |
| ET | 29 | 727715 | 0 |
| Average | 33.7 | 1576426 | -3.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.7 hedge funds with bullish positions and the average amount invested in these stocks was $1576 million. That figure was $488 million in ANET’s case. Peloton Interactive, Inc. (NASDAQ:PTON) is the most popular stock in this table. On the other hand Deutsche Bank Aktiengesellschaft (NYSE:DB) is the least popular one with only 15 bullish hedge fund positions. Arista Networks Inc (NYSE:ANET) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ANET is 47.5. 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 29.6% in 2021 and still beat the market by 3.6 percentage points. A small number of hedge funds were also right about betting on ANET as the stock returned 44.7% since the end of the third quarter (through 1/31) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
