Here is What Hedge Funds Think About Digi International Inc. (DGII)

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We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Bryn Mawr Capital. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case, because only one of the 700+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Algert Coldiron Investors).

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Digi International Inc. (NASDAQ:DGII) but similarly valued. These stocks are PHI Inc. (NASDAQ:PHIIK), Republic Airways Holdings Inc. (NASDAQ:RJET), Central European Media Enterprises Ltd. (NASDAQ:CETV), and Nanometrics Incorporated (NASDAQ:NANO). This group of stocks’ market valuations are closest to DGII’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PHIIK 8 91489 0
RJET 18 83004 0
CETV 8 55195 -2
NANO 7 46491 0

As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $69 million. That figure was $16 million in DGII’s case. Republic Airways Holdings Inc. (NASDAQ:RJET) is the most popular stock in this table. On the other hand Nanometrics Incorporated (NASDAQ:NANO) is the least popular one with only 7 bullish hedge fund positions. Digi International Inc. (NASDAQ:DGII) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard RJET might be a better candidate to consider a long position.

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