What Covestor managers are selling: Westell Technologies (WSTL, NTGR)


Richard Moore is a Covestor manager with more than 40 years of investment experience. Richard has worked for banks, mutual funds and investment advisors. He believes it’s counterproductive to spend time trying to outguess the market on large, widely-followed stocks, so he

screens broad US market with models he has refined over many years with 2 main indicators to expose stocks to research. My valuation screen uses relative and adjusted EBITDA multiples compared to their industry peers. My momentum screen looks at relative price performance over the time periods in 3 month, 6 month and 12 month cycles, to restrict to those that the market indicates are outperforming their peers.

Richard is now retired and self-manages his retirement account full time. He has been managing his IRA since 2001.

Moore manages Covestor’s Market Comparables portfolio, which follows the aforementioned strategy and has a risk score of 3. He recently sold Westell Technologies (Nasdaq: WSTL), which designs and distributes telecommunications products and audio, Web and video conferencing services. WSTL recently sold a division to Netgear (Nasdaq: NTGR):

Netgear Inc. said Friday it has agreed to buy the customer networking solutions division of Westell Technologies Inc. for $33.5 million.

The business to be acquired provides high-speed internet networking products to telephone companies, allowing voice, data, video and other services to stream over existing copper and fiber optic telephone lines.

Westell will retain certain customer relationships and its HomeCloud product line. Otherwise, the deal includes substantially all assets of the CNS division. The business generated revenue of $39.5 million during 2010.

The Motley Fool also noted WSTL as a company that is little known but being purchased by hedge funds:

Small-cap tech stocks may provide significant opportunities for investors, but the trick is determining which ones are primed for growth. For Mark Conley, director of research at Broadpoint AmTech, companies with strong product cycles are especially attractive.

These are the tech stocks hedge funds are buying like crazy — what do you think of them?

4. Westell Technologies: Market cap of $237M. … Institutional investors currently own 27,322,305 shares vs. 24,110,626 shares held three months ago (13.32% change).

 

Sources:

“Netgear to buy Westell Technologies’ CNS division” Netgear Inc, 3/18. http://finance.yahoo.com/news/Netgear-to-buy-Westell-apf-4011283125.html?x=0&.v=1

“You Don’t Know These Tech Stocks, but Hedge Funds Are Buying Them Like Crazy” Eben Esterhuizen. The Motley Fool, 4/6. http://www.fool.com/investing/general/2011/04/06/you-dont-know-these-tech-stocks-but-hedge-funds-ar.aspx