Is Procera Networks, Inc. (PKT) Going to Burn These Hedge Funds?

Procera Networks, Inc. (NASDAQ:PKT) shareholders have witnessed a decrease in hedge fund sentiment of late.

If you’d ask most stock holders, hedge funds are assumed to be worthless, outdated financial vehicles of yesteryear. While there are greater than 8000 funds with their doors open at the moment, we choose to focus on the crème de la crème of this group, around 450 funds. It is estimated that this group has its hands on the majority of all hedge funds’ total capital, and by tracking their top investments, we have figured out a few investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Equally as integral, optimistic insider trading activity is a second way to break down the investments you’re interested in. Just as you’d expect, there are a variety of stimuli for an executive to cut shares of his or her company, but just one, very obvious reason why they would behave bullishly. Various empirical studies have demonstrated the valuable potential of this tactic if shareholders understand where to look (learn more here).

Keeping this in mind, we’re going to take a look at the key action encompassing Procera Networks, Inc. (NASDAQ:PKT).

What have hedge funds been doing with Procera Networks, Inc. (NASDAQ:PKT)?

Heading into Q2, a total of 12 of the hedge funds we track were long in this stock, a change of 0% from one quarter earlier. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were increasing their stakes meaningfully.

When looking at the hedgies we track, Archon Capital Management, managed by Constantinos J. Christofilis, holds the biggest position in Procera Networks, Inc. (NASDAQ:PKT). Archon Capital Management has a $10.7 million position in the stock, comprising 5.5% of its 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, managed by Jim Simons, which held a $3.4 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds that hold long positions include Anand Parekh’s Alyeska Investment Group, Joseph A. Jolson’s Harvest Capital Strategies and Cliff Asness’s AQR Capital Management.

Since Procera Networks, Inc. (NASDAQ:PKT) has experienced declining sentiment from the entirety of the hedge funds we track, it’s safe to say that there is a sect of hedgies that decided to sell off their full holdings at the end of the first quarter. Intriguingly, Donald Chiboucis’s Columbus Circle Investors said goodbye to the biggest position of the 450+ funds we monitor, totaling an estimated $24.1 million in stock., and Philip Hempleman of Ardsley Partners was right behind this move, as the fund cut about $6.5 million worth. These moves are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

How have insiders been trading Procera Networks, Inc. (NASDAQ:PKT)?

Insider purchases made by high-level executives is at its handiest when the company in question has seen transactions within the past half-year. Over the last 180-day time frame, Procera Networks, Inc. (NASDAQ:PKT) has seen zero unique insiders purchasing, and 1 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Procera Networks, Inc. (NASDAQ:PKT). These stocks are Callidus Software Inc. (NASDAQ:CALD), Sapiens International Corporation N.V. (NASDAQ:SPNS), eGain Communications Corporation (NASDAQ:EGAN), Formula Systems (1985) Ltd. (ADR) (NASDAQ:FORTY), and Saba Software, Inc. (NASDAQ:SABA). All of these stocks are in the business software & services industry and their market caps are closest to PKT’s market cap.