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Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Extreme Networks, Inc (NASDAQ:EXTR).
Is Extreme Networks, Inc (NASDAQ:EXTR) a great investment today? Prominent investors were becoming hopeful. The number of long hedge fund positions went up by 6 lately. Extreme Networks, Inc (NASDAQ:EXTR) was in 25 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 25. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that EXTR isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 19 hedge funds in our database with EXTR positions at the end of the fourth quarter.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Ryan Tolkin, CIO of Schonfeld Strategic Advisors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let's take a gander at the key hedge fund action encompassing Extreme Networks, Inc (NASDAQ:EXTR).
Do Hedge Funds Think EXTR Is A Good Stock To Buy Now?
At the end of March, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 32% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in EXTR over the last 23 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Extreme Networks, Inc (NASDAQ:EXTR), with a stake worth $41.4 million reported as of the end of March. Trailing Renaissance Technologies was Rubric Capital Management, which amassed a stake valued at $21.5 million. D E Shaw, Voss Capital, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Voss Capital allocated the biggest weight to Extreme Networks, Inc (NASDAQ:EXTR), around 8.39% of its 13F portfolio. Cumberland Associates / Springowl Associates is also relatively very bullish on the stock, earmarking 2.71 percent of its 13F equity portfolio to EXTR.
As one would reasonably expect, key money managers have jumped into Extreme Networks, Inc (NASDAQ:EXTR) headfirst. Tudor Investment Corp, managed by Paul Tudor Jones, established the most valuable position in Extreme Networks, Inc (NASDAQ:EXTR). Tudor Investment Corp had $1.9 million invested in the company at the end of the quarter. Michael Gelband's ExodusPoint Capital also initiated a $1.7 million position during the quarter. The other funds with brand new EXTR positions are Parvinder Thiara's Athanor Capital, Karim Abbadi and Edward McBride's Centiva Capital, and Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Extreme Networks, Inc (NASDAQ:EXTR) but similarly valued. These stocks are QuinStreet Inc (NASDAQ:QNST), iClick Interactive Asia Group Limited (NASDAQ:ICLK), Celestica Inc. (NYSE:CLS), Syndax Pharmaceuticals, Inc. (NASDAQ:SNDX), Nkarta, Inc. (NASDAQ:NKTX), Personalis, Inc. (NASDAQ:PSNL), and Scorpio Tankers Inc. (NYSE:STNG). All of these stocks' market caps are closest to EXTR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position QNST,20,158803,4 ICLK,9,19971,1 CLS,13,134815,0 SNDX,33,486256,-4 NKTX,15,384765,1 PSNL,13,220652,-2 STNG,20,87802,2 Average,17.6,213295,0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.6 hedge funds with bullish positions and the average amount invested in these stocks was $213 million. That figure was $183 million in EXTR's case. Syndax Pharmaceuticals, Inc. (NASDAQ:SNDX) is the most popular stock in this table. On the other hand iClick Interactive Asia Group Limited (NASDAQ:ICLK) is the least popular one with only 9 bullish hedge fund positions. Extreme Networks, Inc (NASDAQ:EXTR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for EXTR is 73.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through July 9th and still beat the market by 6.7 percentage points. Hedge funds were also right about betting on EXTR as the stock returned 27.5% since the end of Q1 (through 7/9) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.