Is Digi International Inc. (DGII) A Good Long-Term Holding?

We view hedge fund activity in the stock as being unfavorable, but in this case there was only a single hedge fund selling its entire position: GRT Capital Partners. 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 none of the 700+ hedge funds tracked by Insider Monkey identified DGII as a viable investment and initiated a position in the stock.

Let’s also examine hedge fund activity in other stocks similar to Digi International Inc. (NASDAQ:DGII). These stocks are AV Homes Inc (NASDAQ:AVHI), Consolidated-Tomoka Land Co. (NYSEAMEX:CTO), Daktronics, Inc. (NASDAQ:DAKT), and Enzo Biochem, Inc. (NYSE:ENZ). This group of stocks’ market values match DGII’s market value.

As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $45 million. That figure was $21 million in DGII’s case. Daktronics, Inc. (NASDAQ:DAKT) is the most popular stock in this table. On the other hand AV Homes Inc (NASDAQ:AVHI) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Digi International Inc. (NASDAQ:DGII) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers and hedge funds seem to view it as a good long-term holding, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

Disclosure: None