Red Hat, Inc. (RHT): Are Hedge Funds Right About This Stock?

Red Hat, Inc. (NYSE:RHT) shareholders have witnessed an increase in enthusiasm from smart money in recent months.

In the 21st century investor’s toolkit, there are many metrics investors can use to analyze publicly traded companies. Two of the most useful are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the top hedge fund managers can trounce the market by a very impressive amount (see just how much).

Equally as key, optimistic insider trading activity is another way to parse down the financial markets. Obviously, there are many stimuli for an insider to sell shares of his or her company, but only one, very simple reason why they would buy. Plenty of academic studies have demonstrated the useful potential of this method if piggybackers understand where to look (learn more here).

With all of this in mind, it’s important to take a glance at the recent action surrounding Red Hat, Inc. (NYSE:RHT).

What does the smart money think about Red Hat, Inc. (NYSE:RHT)?

At Q1’s end, a total of 35 of the hedge funds we track held long positions in this stock, a change of 25% from one quarter earlier. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were upping their holdings significantly.

Of the funds we track, Tremblant Capital, managed by Brett Barakett, holds the most valuable position in Red Hat, Inc. (NYSE:RHT). Tremblant Capital has a $124.7 million call position in the stock, comprising 5.9% of its 13F portfolio. On Tremblant Capital’s heels is Alkeon Capital Management, managed by Panayotis Takis Sparaggis, which held a $114.2 million position; 2.5% of its 13F portfolio is allocated to the company. Remaining peers with similar optimism include D. E. Shaw’s D E Shaw, John Overdeck and David Siegel’s Two Sigma Advisors and Joe DiMenna’s ZWEIG DIMENNA PARTNERS.

As one would reasonably expect, key hedge funds have jumped into Red Hat, Inc. (NYSE:RHT) headfirst. Tremblant Capital, managed by Brett Barakett, initiated the most outsized call position in Red Hat, Inc. (NYSE:RHT). Tremblant Capital had 124.7 million invested in the company at the end of the quarter. Joe DiMenna’s ZWEIG DIMENNA PARTNERS also initiated a $55.6 million position during the quarter. The other funds with new positions in the stock are George Soros’s Soros Fund Management, Steven Cohen’s SAC Capital Advisors, and Scott Fine and Peter Richards’s Empire Capital Management.

Insider trading activity in Red Hat, Inc. (NYSE:RHT)

Insider buying is particularly usable when the primary stock in question has seen transactions within the past half-year. Over the latest 180-day time period, Red Hat, Inc. (NYSE:RHT) has seen zero unique insiders purchasing, and 5 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Red Hat, Inc. (NYSE:RHT). These stocks are BMC Software, Inc. (NASDAQ:BMC), F5 Networks, Inc. (NASDAQ:FFIV), CA, Inc. (NASDAQ:CA), Catamaran Corp (USA) (NASDAQ:CTRX), and Workday Inc (NYSE:WDAY). This group of stocks are in the application software industry and their market caps resemble RHT’s market cap.