Where Do Hedge Funds Stand On Palo Alto Networks Inc (PANW)?

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Palo Alto Networks Inc (NYSE:PANW), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Palo Alto Networks Inc (NYSE:PANW) shareholders have witnessed an increase in hedge fund sentiment in recent months. Palo Alto Networks Inc (NYSE:PANW) was in 64 hedge funds’ portfolios at the end of March. The all time high for this statistic was previously 61. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 61 hedge funds in our database with PANW positions at the end of the fourth quarter. Our calculations also showed that PANW isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In the eyes of most traders, hedge funds are perceived as unimportant, old financial vehicles of yesteryear. While there are more than 8000 funds with their doors open today, Our experts choose to focus on the elite of this club, about 850 funds. These hedge fund managers oversee bulk of all hedge funds’ total capital, and by observing their inimitable equity investments, Insider Monkey has determined many investment strategies that have historically outstripped the market. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Ole Andreas Halvorsen of Viking Global

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

At Q1’s end, a total of 64 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% 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 hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

The largest stake in Palo Alto Networks Inc (NYSE:PANW) was held by Viking Global, which reported holding $807.8 million worth of stock at the end of December. It was followed by Generation Investment Management with a $719 million position. Other investors bullish on the company included Renaissance Technologies, Citadel Investment Group, and Cadian Capital. In terms of the portfolio weights assigned to each position Isomer Partners allocated the biggest weight to Palo Alto Networks Inc (NYSE:PANW), around 12.08% of its 13F portfolio. Crosslink Capital is also relatively very bullish on the stock, earmarking 9.77 percent of its 13F equity portfolio to PANW.

With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Point State Capital, managed by Zach Schreiber, initiated the largest position in Palo Alto Networks Inc (NYSE:PANW). Point State Capital had $27 million invested in the company at the end of the quarter. Tor Minesuk’s Mondrian Capital also made a $8.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management, Parvinder Thiara’s Athanor Capital, and Jinghua Yan’s TwinBeech Capital.

Let’s now review hedge fund activity in other stocks similar to Palo Alto Networks Inc (NYSE:PANW). These stocks are V.F. Corporation (NYSE:VFC), NatWest Group plc (NYSE:NWG), McKesson Corporation (NYSE:MCK), AutoZone, Inc. (NYSE:AZO), The Trade Desk, Inc. (NASDAQ:TTD), Rockwell Automation Inc. (NYSE:ROK), and Delta Air Lines, Inc. (NYSE:DAL). This group of stocks’ market values resemble PANW’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 33.3 hedge funds with bullish positions and the average amount invested in these stocks was $907 million. That figure was $4015 million in PANW’s case. McKesson Corporation (NYSE:MCK) is the most popular stock in this table. On the other hand NatWest Group plc (NYSE:NWG) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Palo Alto Networks Inc (NYSE:PANW) is more popular among hedge funds. Our overall hedge fund sentiment score for PANW is 88. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks returned 17.2% in 2021 through June 11th but still managed to beat the market by 3.3 percentage points. Hedge funds were also right about betting on PANW as the stock returned 13.6% since the end of March (through 6/11) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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