Should You Buy NetGear, Inc. (NTGR)?

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Is NetGear, Inc. (NASDAQ:NTGR) the right pick for your portfolio? Hedge funds are becoming hopeful. The number of bullish hedge fund bets improved by 1 lately.

To the average investor, there are a multitude of methods investors can use to track the equity markets. A duo of the most innovative are hedge fund and insider trading interest. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the top investment managers can outpace the S&P 500 by a healthy amount (see just how much).

Equally as beneficial, optimistic insider trading activity is a second way to parse down the investments you’re interested in. Obviously, there are many incentives for an insider to drop shares of his or her company, but only one, very simple reason why they would behave bullishly. Several academic studies have demonstrated the valuable potential of this tactic if piggybackers understand what to do (learn more here).

With these “truths” under our belt, it’s important to take a gander at the recent action surrounding NetGear, Inc. (NASDAQ:NTGR).

How have hedgies been trading NetGear, Inc. (NASDAQ:NTGR)?

At the end of the first quarter, a total of 7 of the hedge funds we track held long positions in this stock, a change of 17% from the first quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their stakes considerably.

Chuck Royce

When looking at the hedgies we track, Royce & Associates, managed by Chuck Royce, holds the most valuable position in NetGear, Inc. (NASDAQ:NTGR). Royce & Associates has a $165.9 million position in the stock, comprising 0.5% of its 13F portfolio. On Royce & Associates’s heels is Ken Fisher of Fisher Asset Management, with a $39.3 million position; 0.1% of its 13F portfolio is allocated to the stock. Other peers with similar optimism include Ken Griffin’s Citadel Investment Group, Joel Greenblatt’s Gotham Asset Management and Israel Englander’s Millennium Management.

As industrywide interest jumped, key money managers were leading the bulls’ herd. Gotham Asset Management, managed by Joel Greenblatt, established the biggest position in NetGear, Inc. (NASDAQ:NTGR). Gotham Asset Management had 1.5 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $1.4 million investment in the stock during the quarter. The only other fund with a brand new NTGR position is Paul Tudor Jones’s Tudor Investment Corp.

What do corporate executives and insiders think about NetGear, Inc. (NASDAQ:NTGR)?

Insider purchases made by high-level executives is best served when the company we’re looking at has seen transactions within the past half-year. Over the last 180-day time frame, NetGear, Inc. (NASDAQ:NTGR) has experienced zero unique insiders buying, and 6 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to NetGear, Inc. (NASDAQ:NTGR). These stocks are Acme Packet, Inc. (NASDAQ:APKT), Arris Group, Inc. (NASDAQ:ARRS), Ciena Corporation (NASDAQ:CIEN), ADTRAN, Inc. (NASDAQ:ADTN), and Loral Space & Communications Ltd. (NASDAQ:LORL). All of these stocks are in the communication equipment industry and their market caps match NTGR’s market cap.

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