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Is Extreme Networks, Inc (EXTR) Going to Burn These Hedge Funds?

Is Extreme Networks, Inc (NASDAQ:EXTR) a good investment?

To many of your fellow readers, hedge funds are perceived as useless, outdated financial tools of a period lost to current times. Although there are more than 8,000 hedge funds trading in present day, this site looks at the aristocrats of this club, close to 525 funds. It is widely held that this group oversees the majority of the hedge fund industry’s total assets, and by monitoring their highest performing investments, we’ve figured out a number of investment strategies that have historically beaten the S&P 500. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 33 percentage points in 11 months (find a sample of our picks).

Just as necessary, positive insider trading sentiment is another way to analyze the investments you’re interested in. There are a variety of reasons for a bullish insider to cut shares of his or her company, but only one, very simple reason why they would behave bullishly. Many empirical studies have demonstrated the valuable potential of this strategy if investors understand where to look (learn more here).

Extreme Networks, Inc (NASDAQ:EXTR)

Now that that’s out of the way, it’s important to analyze the recent info about Extreme Networks, Inc (NASDAQ:EXTR).

How are hedge funds trading Extreme Networks, Inc (NASDAQ:EXTR)?

At Q2’s end, a total of 16 of the hedge funds we track were long in this stock, a change of 7% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their holdings meaningfully.

When using filings from the hedgies we track, Soros Fund Management, managed by George Soros, holds the most valuable position in Extreme Networks, Inc (NASDAQ:EXTR). Soros Fund Management has a $31.9 million position in the stock, comprising 0.3% of its 13F portfolio. On Soros Fund Management’s heels is Jeffrey Smith of Starboard Value LP, with a $26.8 million position; 1.9% of its 13F portfolio is allocated to the stock. Other hedge funds that are bullish include Jim Simons’s Renaissance Technologies, Brett Hendrickson’s Nokomis Capital and Peter S. Park’s Park West Asset Management.

As one would understandably expect, specific money managers were leading the bulls’ herd. Soros Fund Management, managed by George Soros, created the most valuable position in Extreme Networks, Inc (NASDAQ:EXTR). Soros Fund Management had 31.9 million invested in the company at the end of the quarter. Jeffrey Smith’s Starboard Value LP also initiated a $26.8 million position during the quarter. The other funds with new positions in the stock are Jim Simons’s Renaissance Technologies, Brett Hendrickson’s Nokomis Capital, and Peter S. Park’s Park West Asset Management.

What have insiders been doing with Extreme Networks, Inc (NASDAQ:EXTR)?

Insider buying is particularly usable when the company in focus has experienced transactions within the past 180 days. Over the last 180-day time frame, Extreme Networks, Inc (NASDAQ:EXTR) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll also take a look at the relationship between both of these indicators 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 belong to the networking & communication devices industry and their market caps resemble EXTR’s market cap.

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