We at Insider Monkey have gone over 887 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article, we look at what those funds think of Palo Alto Networks Inc (NYSE:PANW) based on that data.
Palo Alto Networks Inc (NYSE:PANW) was in 61 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic was previously 59. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. PANW investors should be aware of an increase in hedge fund sentiment of late. There were 59 hedge funds in our database with PANW positions at the end of the third quarter. Our calculations also showed that PANW isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
David Blood of Generation Investment Management
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Do Hedge Funds Think PANW Is A Good Stock To Buy Now?
At the end of December, a total of 61 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from one quarter earlier. On the other hand, there were a total of 47 hedge funds with a bullish position in PANW a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Renaissance Technologies has the largest position in Palo Alto Networks Inc (NYSE:PANW), worth close to $1.0849 billion, accounting for 1.2% of its total 13F portfolio. Sitting at the No. 2 spot is Generation Investment Management, managed by David Blood and Al Gore, which holds a $963.5 million position; 4.3% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors with similar optimism comprise Andreas Halvorsen’s Viking Global, Eric Bannasch’s Cadian Capital and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Isomer Partners allocated the biggest weight to Palo Alto Networks Inc (NYSE:PANW), around 11.05% of its 13F portfolio. Crosslink Capital is also relatively very bullish on the stock, setting aside 9.84 percent of its 13F equity portfolio to PANW.
With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Viking Global, managed by Andreas Halvorsen, initiated the most outsized position in Palo Alto Networks Inc (NYSE:PANW). Viking Global had $670.7 million invested in the company at the end of the quarter. Brandon Haley’s Holocene Advisors also initiated a $147.9 million position during the quarter. The other funds with new positions in the stock are John Hurley’s Cavalry Asset Management, Ben Jacobs’s Anomaly Capital Management, and Parvinder Thiara’s Athanor Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Palo Alto Networks Inc (NYSE:PANW) but similarly valued. These stocks are IQVIA Holdings, Inc. (NYSE:IQV), T. Rowe Price Group, Inc. (NASDAQ:TROW), Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN), PPG Industries, Inc. (NYSE:PPG), RingCentral Inc (NYSE:RNG), Verisk Analytics, Inc. (NASDAQ:VRSK), and Johnson Controls International plc (NYSE:JCI). This group of stocks’ market caps resemble PANW’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IQV | 69 | 3764572 | 5 |
| TROW | 35 | 360876 | 1 |
| ALXN | 77 | 6025546 | 19 |
| PPG | 34 | 295422 | -2 |
| RNG | 63 | 4401111 | 4 |
| VRSK | 32 | 1438418 | -8 |
| JCI | 34 | 795050 | 10 |
| Average | 49.1 | 2440142 | 4.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 49.1 hedge funds with bullish positions and the average amount invested in these stocks was $2440 million. That figure was $4935 million in PANW’s case. Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) is the most popular stock in this table. On the other hand Verisk Analytics, Inc. (NASDAQ:VRSK) is the least popular one with only 32 bullish hedge fund positions. Palo Alto Networks Inc (NYSE:PANW) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PANW is 69.2. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and beat the market again by 1.6 percentage points. Unfortunately PANW wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on PANW were disappointed as the stock returned -0.6% since the end of December (through 4/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
