Is Extreme Networks, Inc (NASDAQ:EXTR) the right pick for your portfolio? The best stock pickers are getting more optimistic. The number of bullish hedge fund bets advanced by 3 recently.
If you’d ask most investors, hedge funds are assumed to be unimportant, old investment tools of the past. While there are more than 8000 funds in operation at present, we at Insider Monkey hone in on the upper echelon of this club, close to 450 funds. Most estimates calculate that this group controls the lion’s share of the smart money’s total capital, and by keeping an eye on their highest performing stock picks, we have deciphered a number of investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 25 percentage points in 6.5 month (see the details here).
Just as important, optimistic insider trading sentiment is another way to break down the marketplace. As the old adage goes: there are plenty of stimuli for a corporate insider to cut shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Many empirical studies have demonstrated the impressive potential of this method if shareholders understand what to do (learn more here).
Now, it’s important to take a look at the recent action encompassing Extreme Networks, Inc (NASDAQ:EXTR).
What have hedge funds been doing with Extreme Networks, Inc (NASDAQ:EXTR)?
At the end of the fourth quarter, a total of 13 of the hedge funds we track were long in this stock, a change of 30% from the third quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their stakes substantially.
Of the funds we track, Starboard Value LP, managed by Jeffrey Smith, holds the biggest position in Extreme Networks, Inc (NASDAQ:EXTR). Starboard Value LP has a $34 million position in the stock, comprising 3.9% of its 13F portfolio. Coming in second is George Soros of Soros Fund Management, with a $34 million position; 0% of its 13F portfolio is allocated to the company. Other peers with similar optimism include Jim Simons’s Renaissance Technologies, Brett Hendrickson’s Nokomis Capital and Spencer M. Waxman’s Shannon River Fund Management.
Consequently, key hedge funds have jumped into Extreme Networks, Inc (NASDAQ:EXTR) headfirst. Millennium Management, managed by Israel Englander, established the largest position in Extreme Networks, Inc (NASDAQ:EXTR). Millennium Management had 1 million invested in the company at the end of the quarter. Cliff Asness’s AQR Capital Management also initiated a $0 million position during the quarter. The other funds with brand new EXTR positions are Steven Cohen’s SAC Capital Advisors and Paul Tudor Jones’s Tudor Investment Corp.
How are insiders trading Extreme Networks, Inc (NASDAQ:EXTR)?
Insider buying is best served when the company in question has experienced transactions within the past 180 days. Over the latest 180-day time period, Extreme Networks, Inc (NASDAQ:EXTR) has experienced 1 unique insiders buying, and 4 insider sales (see the details of insider trades here).
Let’s also take a look at hedge fund and insider activity in other stocks similar to Extreme Networks, Inc (NASDAQ:EXTR). These stocks are Silicom Ltd. (NASDAQ:SILC), Super Micro Computer, Inc. (NASDAQ:SMCI), Digi International Inc. (NASDAQ:DGII), Black Box Corporation (NASDAQ:BBOX), and Globecomm Systems, Inc. (NASDAQ:GCOM). This group of stocks are the members of the networking & communication devices industry and their market caps match EXTR’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Silicom Ltd. (NASDAQ:SILC)||2||0||0|
|Super Micro Computer, Inc. (NASDAQ:SMCI)||6||0||3|
|Digi International Inc. (NASDAQ:DGII)||7||0||1|
|Black Box Corporation (NASDAQ:BBOX)||4||0||0|
|Globecomm Systems, Inc. (NASDAQ:GCOM)||7||0||5|
With the results shown by our time-tested strategies, everyday investors must always keep an eye on hedge fund and insider trading activity, and Extreme Networks, Inc (NASDAQ:EXTR) applies perfectly to this mantra.