Hedge funds are piling into Cisco stock for good reason. The networking giant’s security revenue has doubled, while it’s nabbing major AI infrastructure orders worth $300 million from web-scale customers. With 84 hedge funds holding positions, including Berkshire Hathaway and Pershing Square Capital, Cisco’s 2.56% dividend yield and low volatility make it attractive. Plus, institutional investors own 73.33% of shares. The transformation from legacy tech to AI player is just beginning.
Why are major hedge funds piling into Cisco stock?
The answer lies in the numbers – a whopping 84 hedge funds currently hold positions in this tech stalwart, ranking it fifth on Insider Monkey’s “Best Retirement Stocks” list.
That’s not too shabby for a company that’s been around since the dawn of the internet.
The smart money seems to know something here.
With institutional investors owning 73.33% of Cisco’s shares, they’re clearly betting on more than just nostalgia for 90s tech.
The company’s latest quarterly results knocked it out of the park – $13.8 billion in revenue and a net income of $2.7 billion.
Not bad for a supposedly “boring” networking company.
The data shows strongly outperforming funds are particularly active buyers.
Northern Trust Corp increased their position to 47.2 million shares by the end of 2024.
Like traditional hedging approaches, these investments serve as a financial safety net against market volatility.
But here’s where it gets interesting.
But when a legacy tech giant starts doubling security revenue and raking in AI infrastructure orders, that’s when heads turn.
Cisco’s making serious moves in AI infrastructure, with $300 million in orders from web-scale customers.
Their security revenue doubled year-over-year.
Yeah, you read that right – doubled.
The old dog’s learning new tricks, and hedge funds are taking notice.
Big names like Bill Ackman’s Pershing Square Capital Management and Warren Buffett’s Berkshire Hathaway aren’t exactly known for making risky bets.
They’re in Cisco for a reason.
The stock’s low beta of 0.79 means it’s less volatile than the market – perfect for those nail-biting market downturns.
Then there’s the dividend – a juicy 2.56% yield that keeps income-focused investors coming back for more.
Sure, some funds like Bridgeway Capital Management trimmed their positions, but others are jumping in.
FPC Investment Advisory, Navigoe, and Highline Wealth Partners all recently established new positions.
The kicker? While tech stocks are generally priced to the moon, Cisco’s valuation metrics suggest it might be undervalued compared to its peers.
With a rock-solid balance sheet and steady cash flow from its networking business, it’s no wonder hedge funds see Cisco as both a value play and a technology transformation opportunity.
Sometimes the boring choice turns out to be the smart one.
