Should You Avoid Cisco Systems Inc. (CSCO)?

Insider Monkey has processed numerous 13F filings of hedge funds and famous investors to create an extensive database of hedge fund holdings. The latest round of 13F filings reveals hedge funds and investors’ positions as of the end of the final quarter of 2015. Retail investors and other stock market participants can find write-ups about an individual hedge fund’s trades on numerous financial news websites. However, in this article we take a look at their collective moves and analyze what the smart money thinks of Cisco Systems Inc. (NASDAQ:CSCO) based on that data.

Cisco Systems, Inc. (NASDAQ:CSCO) was in 60 hedge funds’ portfolios at the end of the fourth quarter of 2015. CSCO shareholders have witnessed a decrease in support from the world’s most elite money managers of late. There were 67 hedge funds in our database with CSCO holdings at the end of the previous quarter. At the end of this article we will also compare CSCO to other stocks, including Philip Morris International Inc. (NYSE:PM), International Business Machines Corp. (NYSE:IBM), and Unilever N.V. (ADR) (NYSE:UN) to get a better sense of its popularity.

Today there are a multitude of gauges stock traders employ to value their stock investments. A duo of the most underrated gauges are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the top money managers can outpace the market by a healthy amount (see the details here).

Cisco Systems Inc. (NASDAQ:CSCO) has seen its shares decline by only 5% over the past 12 months, despite experiencing a substantial pullback at the beginning of 2016, from which the stock has successfully recovered. Instead of channeling substantial capital towards research and development activities, Cisco opts for buying smaller tech companies to grow its business and expand operations. The networking giant usually buys in excess of ten companies a year, most of which involve relatively small deals. Having said that, let’s put a spotlight on the latest wave of acquisitions and possible reasons behind these deals. At the beginning of February 2016, the company revealed plans to purchase privately-held Jasper Technologies for approximately $1.4 billion in cash and share-based awards. Santa Clara-based Jasper provides a cloud-based Internet of Things (IoT) software-as-a-service platform that enables enterprises and service providers to manage and monetize IoT services. On March 1, Cisco Systems Inc. (NASDAQ:CSCO) announced its intention to acquire cloud computing start-up called CliQr for $260 million, which is intended to assist Cisco customers in accelerating their private, public and hybrid cloud deployments. One day later, Cisco revealed its plans to acquire Israel-based networking chip market Leaba Semiconductor for $320 million; a deal that is expected to “accelerate our plans for Cisco’s next generation product portfolio and bring new capabilities to the market faster”. Last but not least, Cisco Systems recently acquired privately-held Synanta, a search-technology start-up that will enable the networking giant to “take Cisco Spark’s existing search capabilities to the next level”.

Now, let’s take a gander at the fresh action surrounding Cisco Systems, Inc. (NASDAQ:CSCO), as well as briefly discuss the company’s financial performance.