What Hedge Funds Think of These Five Cybersecurity Stocks

#3 FireEye Inc (NASDAQ:FEYE)

-Hedge Funds with Long Positions (as of September 30): 37

-Aggregate Value of Hedge Funds’ Holdings (as of September 30): $384 million

FireEye Inc (NASDAQ:FEYE) has been one of the most volatile cybersecurity stock this year. While it rose almost 40% during the first-half of the year and made a yearly high of $55.33 in June, it has fallen more than 60% from that high since then. Despite this rapid decline, hedge funds didn’t lose their conviction in the stock during the third quarter. 2 more funds reported owning a stake in the company at the end of September than those who reported it at the end of June. Currently the stock of FireEye Inc (NASDAQ:FEYE) trades at 6 times trailing sales and a price-to-book multiple of 3.08, which makes it considerably cheaper than several high-profile stocks in the cybersecurity sector. Karthik Sarma‘s SRS Investment Management increased its stake in FireEye by 36% to almost 4.5 million shares during the third quarter and continued to remain the largest shareholder of the company among the funds tracked by us at the end of September.

#2 Juniper Networks, Inc. (NYSE:JNPR)

-Hedge Funds with Long Positions (as of September 30): 41

-Aggregate Value of Hedge Funds’ Holdings (as of September 30): $928.2 million

Juniper Networks, Inc. (NYSE:JNPR) has performed remarkably well in the fourth quarter, which has helped push its year-to-date gains to over 30%. However, in the third quarter – when the stock remained largely flat – the company suffered a huge drop in popularity among hedge funds. The number of funds covered by us that reported owning stake in Juniper Networks, Inc. (NYSE:JNPR) at the end of third quarter decline by 4 from those who reported at the start of it and the aggregate value of investors’ holdings in the company saw an astonishing 50% decline. Considering that the stock has performed so well in the fourth quarter, it won’t be unfair to say that most hedge funds got their bets really wrong on this one. Nevertheless, there were a few funds like Joel Greenblatt‘s Gotham Asset Management, which increased their stakes in Juniper Networks substantially during the third quarter and will be sitting on huge profits if they continue to hold on to those shares.

#1 Palo Alto Networks Inc (NYSE:PANW)

-Hedge Funds with Long Positions (as of September 30): 47

-Aggregate Value of Hedge Funds’ Holdings (as of September 30): $915 million

By virtue of being one of the best performing cybersecurity and tech stocks this year with year-to-date gains of over 52%, it’s no surprise that Palo Alto Networks Inc (NYSE:PANW) has emerged as the winner in this list. Hedge fund ownership of the company among the funds covered by us rose by two during the third quarter, while the aggregate value of hedge funds’ holdings in the company increased by almost 25%. For the third quarter of fiscal 2015 the company reported better than expected results, marking its sixth quarterly beat in a row. While the Street had expected it to report EPS of $0.32 on revenue of $284.19 million, Palo Alto Networks Inc (NYSE:PANW) declared EPS of $0.35 on revenue of $297 million. Billioanire Jim Simons‘ Renaissance Technologies made a fivefold increase in its stake in Palo Alto Networks during the third quarter and held 630,100 shares of the company at the end of that period.

Disclosure: None