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Is Gigamon Inc (GIMO) A Good Stock To Buy?

We at Insider Monkey have gone over 700 13F filings that hedge funds and prominent investors are required to file by the government. The 13F filings show the funds’ and investors’ portfolio positions as of September 30. In this article, we look at what those funds think of Gigamon Inc (NYSE:GIMO) based on that data.

Hedge fund interest in Gigamon Inc (NYSE:GIMO) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article, we will examine companies such as Kulicke and Soffa Industries Inc. (NASDAQ:KLIC), Textura Corp (NYSE:TXTR), and AAR Corp. (NYSE:AIR) to gather more data points.

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In the financial world, there are numerous metrics market participants employ to evaluate their holdings. A pair of the less utilized metrics are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the top hedge fund managers can outperform their index-focused peers by a very impressive amount (see the details here).

Now, let’s take a peek at the new action surrounding Gigamon Inc (NYSE:GIMO).

What does the smart money think about Gigamon Inc (NYSE:GIMO)?

At the end of the third quarter, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, unchanged from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Thomas Ellis and Todd Hammer’s North Run Capital has the largest position in Gigamon Inc (NYSE:GIMO), worth close to $24.1 million, amounting to 2.4% of its total 13F portfolio. On North Run Capital’s heels is Millennium Management, led by Israel Englander, holding a $17.5 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Remaining peers that are bullish contain Renaissance Technologies, Mark Kingdon’s Kingdon Capital, and D E Shaw.

Judging by the fact that Gigamon Inc (NYSE:GIMO) has faced a declination in interest from the entirety of the hedge funds we track, we can see that there were a few money managers that decided to sell off their full holdings last quarter. At the top of the heap, Anand Parekh’s Alyeska Investment Group cut the biggest investment of all the hedgies followed by Insider Monkey, totaling about $20.8 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also dropped its stock, about $4.4 million worth of shares. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Gigamon Inc (NYSE:GIMO) but similarly valued. These stocks are Kulicke and Soffa Industries Inc. (NASDAQ:KLIC), Textura Corp (NYSE:TXTR), AAR Corp. (NYSE:AIR), and CenterState Banks Inc (NASDAQ:CSFL). This group of stocks’ market values is closest to Gigamon Inc (NYSE:GIMO)’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
KLIC 16 55659 1
TXTR 6 17725 0
AIR 22 50756 7
CSFL 15 109897 0

As you can see, these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $59 million. That figure was $105 million in Gigamon Inc (NYSE:GIMO)’s case. AAR Corp. (NYSE:AIR) is the most popular stock in this table. On the other hand, Textura Corp (NYSE:TXTR) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks, Gigamon Inc (NYSE:GIMO) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

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