Is Fortinet Inc (NASDAQ:FTNT) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from industry insiders. They fail miserably sometimes but historically their consensus stock picks outperformed the market after adjusting for known risk factors.
Fortinet Inc (NASDAQ:FTNT) investors should be aware of a decrease in support from the world’s most elite money managers of late. The number of long bullish hedge fund positions that are disclosed in 13F filings declined from 26 at the end of June to 25 at the end of September. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as athenahealth, Inc (NASDAQ:ATHN), Pinnacle Foods Inc (NYSE:PF), and Carter’s, Inc. (NYSE:CRI) to gather more data points.
Follow Fortinet Inc. (NASDAQ:FTNT)
Follow Fortinet Inc. (NASDAQ:FTNT)
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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Now, we’re going to take a look at the key action surrounding Fortinet Inc (NASDAQ:FTNT).
What does the smart money think about Fortinet Inc (NASDAQ:FTNT)?
Heading into the fourth quarter of 2016, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of -4% from the second quarter of 2016. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the number one position in Fortinet Inc (NASDAQ:FTNT). Citadel Investment Group has a $149.6 million position in the stock, comprising 0.2% of its 13F portfolio. Coming in second is Eminence Capital, led by Ricky Sandler, holding a $78.1 million position; the fund has 1.3% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism include Jim Simons’s Renaissance Technologies, Israel Englander’s Millennium Management and Cliff Asness’s AQR Capital Management.
Judging by the fact that Fortinet Inc (NASDAQ:FTNT) has faced bearish sentiment from the smart money, logic holds that there lies a certain “tier” of money managers that elected to cut their entire stakes heading into Q4. At the top of the heap, Jacob Gottlieb’s Visium Asset Management dumped the biggest position of all the hedgies monitored by Insider Monkey (the fund was closed during Q3), and George Hall’s Clinton Group was right behind this move, as the fund said goodbye to about $3.2 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds heading into Q4.
Let’s go over hedge fund activity in other stocks similar to Fortinet Inc (NASDAQ:FTNT). These stocks are athenahealth, Inc (NASDAQ:ATHN), Pinnacle Foods Inc (NYSE:PF), Carter’s, Inc. (NYSE:CRI), and Six Flags Entertainment Corp (NYSE:SIX). This group of stocks’ market caps resemble FTNT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ATHN | 15 | 156671 | -5 |
| PF | 41 | 1449617 | 8 |
| CRI | 35 | 1037585 | -3 |
| SIX | 28 | 1041188 | -4 |
As you can see these stocks had an average of 29.75 hedge funds with bullish positions and the average amount invested in these stocks was $921 million. That figure was $439 million in FTNT’s case. Pinnacle Foods Inc (NYSE:PF) is the most popular stock in this table. On the other hand athenahealth, Inc (NASDAQ:ATHN) is the least popular one with only 15 bullish hedge fund positions. Fortinet Inc (NASDAQ:FTNT) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard PF might be a better candidate to consider taking a long position in.
