The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 866 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards Progress Software Corporation (NASDAQ:PRGS).
Is Progress Software Corporation (NASDAQ:PRGS) a cheap investment today? Money managers were in a bullish mood. The number of long hedge fund positions moved up by 2 lately. Progress Software Corporation (NASDAQ:PRGS) was in 18 hedge funds’ portfolios at the end of March. The all time high for this statistic is 27. Our calculations also showed that PRGS isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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. With all of this in mind we’re going to review the latest hedge fund action regarding Progress Software Corporation (NASDAQ:PRGS).
Do Hedge Funds Think PRGS Is A Good Stock To Buy Now?
At Q1’s end, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from the fourth quarter of 2020. By comparison, 22 hedge funds held shares or bullish call options in PRGS a year ago. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
The largest stake in Progress Software Corporation (NASDAQ:PRGS) was held by Renaissance Technologies, which reported holding $88.3 million worth of stock at the end of December. It was followed by GLG Partners with a $22.3 million position. Other investors bullish on the company included Arrowstreet Capital, D E Shaw, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position AlphaCrest Capital Management allocated the biggest weight to Progress Software Corporation (NASDAQ:PRGS), around 0.12% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, setting aside 0.11 percent of its 13F equity portfolio to PRGS.
As one would reasonably expect, key money managers have been driving this bullishness. Millennium Management, managed by Israel Englander, created the biggest position in Progress Software Corporation (NASDAQ:PRGS). Millennium Management had $1.4 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $1 million investment in the stock during the quarter. The following funds were also among the new PRGS investors: Michael Gelband’s ExodusPoint Capital and Paul Tudor Jones’s Tudor Investment Corp.
Let’s also examine hedge fund activity in other stocks similar to Progress Software Corporation (NASDAQ:PRGS). We will take a look at Pretium Resources Inc (NYSE:PVG), McGrath RentCorp (NASDAQ:MGRC), KAR Auction Services Inc (NYSE:KAR), Gevo, Inc. (NASDAQ:GEVO), The Buckle, Inc. (NYSE:BKE), Perficient, Inc. (NASDAQ:PRFT), and Knowles Corp (NYSE:KN). This group of stocks’ market caps are closest to PRGS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PVG | 22 | 154632 | 0 |
| MGRC | 13 | 66010 | -7 |
| KAR | 22 | 161089 | -5 |
| GEVO | 6 | 61483 | -1 |
| BKE | 22 | 77783 | 10 |
| PRFT | 22 | 98024 | 2 |
| KN | 18 | 299542 | -9 |
| Average | 17.9 | 131223 | -1.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.9 hedge funds with bullish positions and the average amount invested in these stocks was $131 million. That figure was $155 million in PRGS’s case. Pretium Resources Inc (NYSE:PVG) is the most popular stock in this table. On the other hand Gevo, Inc. (NASDAQ:GEVO) is the least popular one with only 6 bullish hedge fund positions. Progress Software Corporation (NASDAQ:PRGS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PRGS is 64.5. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 28.5% in 2021 through July 23rd and beat the market again by 10.1 percentage points. Unfortunately PRGS wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PRGS were disappointed as the stock returned 5.4% since the end of March (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Progress Software Corp (NASDAQ:PRGS)
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Disclosure: None. This article was originally published at Insider Monkey.
