Is FFIV Stock A Buy or Sell?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the fourth quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of F5 Networks, Inc. (NASDAQ:FFIV) based on that data.

Is FFIV stock a buy? F5 Networks, Inc. (NASDAQ:FFIV) has seen a decrease in hedge fund interest lately. F5 Networks, Inc. (NASDAQ:FFIV) was in 34 hedge funds’ portfolios at the end of the fourth quarter of 2020. 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 Q4 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Paul Singer of Elliott Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let’s go over the key hedge fund action regarding F5 Networks, Inc. (NASDAQ:FFIV).

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

At the end of December, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from the third quarter of 2020. Below, you can check out the change in hedge fund sentiment towards FFIV over the last 22 quarters. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Renaissance Technologies, founded by Jim Simons, holds the number one position in F5 Networks, Inc. (NASDAQ:FFIV). Renaissance Technologies has a $531.1 million position in the stock, comprising 0.6% of its 13F portfolio. The second most bullish fund manager is Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holding a $151.3 million position; 0.2% of its 13F portfolio is allocated to the company. Some other members of the smart money with similar optimism include Ken Griffin’s Citadel Investment Group, Paul Singer’s Elliott Investment Management and Cliff Asness’s AQR Capital Management. In terms of the portfolio weights assigned to each position AIGH Investment Partners allocated the biggest weight to F5 Networks, Inc. (NASDAQ:FFIV), around 5.36% of its 13F portfolio. Te Ahumairangi Investment Management is also relatively very bullish on the stock, setting aside 1.24 percent of its 13F equity portfolio to FFIV.

Due to the fact that F5 Networks, Inc. (NASDAQ:FFIV) has faced a decline in interest from the aggregate hedge fund industry, it’s safe to say that there were a few funds that slashed their full holdings last quarter. It’s worth mentioning that Dmitry Balyasny’s Balyasny Asset Management dumped the largest position of the “upper crust” of funds followed by Insider Monkey, worth close to $45.6 million in stock, and Anand Parekh’s Alyeska Investment Group was right behind this move, as the fund dumped about $38.4 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks similar to F5 Networks, Inc. (NASDAQ:FFIV). We will take a look at AbCellera Biologics Inc. (NASDAQ:ABCL), Universal Display Corporation (NASDAQ:OLED), Guidewire Software Inc (NYSE:GWRE), Pegasystems Inc. (NASDAQ:PEGA), LKQ Corporation (NASDAQ:LKQ), Allegion plc (NYSE:ALLE), and Lumen Technologies, Inc. (NYSE:LUMN). All of these stocks’ market caps are similar to FFIV’s market cap.

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As you can see these stocks had an average of 31.7 hedge funds with bullish positions and the average amount invested in these stocks was $1331 million. That figure was $1132 million in FFIV’s case. LKQ Corporation (NASDAQ:LKQ) is the most popular stock in this table. On the other hand Universal Display Corporation (NASDAQ:OLED) is the least popular one with only 24 bullish hedge fund positions. F5 Networks, 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 48.4. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7.9% in 2021 through April 1st and still beat the market by 0.4 percentage points. Hedge funds were also right about betting on FFIV as the stock returned 20% since the end of Q4 (through 4/1) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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