Is Progress Software Corporation (NASDAQ:PRGS) a good bet right now? We like to analyze hedge fund sentiment before doing days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy league graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments (for some reason media paid a ton of attention to Ackman’s gigantic JC Penney and Valeant failures) and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Progress Software Corporation has seen a decrease in hedge fund interest of late. PRGS was in 13 hedge funds’ portfolios at the end of the third quarter of 2015. There were 15 hedge funds in our database with PRGS holdings at the end of the previous quarter. At the end of this article we will also compare PRGS to other stocks including Popeyes Louisiana Kitchen Inc (NASDAQ:PLKI), 3D Systems Corporation (NYSE:DDD), and WD-40 Company (NASDAQ:WDFC) to get a better sense of its popularity.
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Keeping this in mind, we’re going to check out the fresh action regarding Progress Software Corporation (NASDAQ:PRGS).
How are hedge funds trading Progress Software Corporation (NASDAQ:PRGS)?
At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from the second quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Trigran Investments, managed by Douglas T. Granat, holds the biggest position in Progress Software Corporation (NASDAQ:PRGS). Trigran Investments has a $13.9 million position in the stock, comprising 4.4% of its 13F portfolio. The second largest stake is held by D E Shaw, with a $10.8 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions consist of Ron Gutfleish’s Elm Ridge Capital, Martin Whitman’s Third Avenue Management and Jim Simons’ Renaissance Technologies.
Seeing as Progress Software Corporation (NASDAQ:PRGS) has experienced falling interest from the smart money, we can see that there exists a select few hedgies who sold off their positions entirely heading into Q4. Interestingly, Joel Greenblatt’s Gotham Asset Management cut the biggest investment of the 700 funds watched by Insider Monkey, worth about $0.4 million in stock. Gavin Saitowitz and Cisco J. del Valle’s fund, Springbok Capital, also dumped its stock. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds heading into Q4.
Let’s now take a look at hedge fund activity in other stocks similar to Progress Software Corporation (NASDAQ:PRGS). These stocks are Popeyes Louisiana Kitchen Inc (NASDAQ:PLKI), 3D Systems Corporation (NYSE:DDD), WD-40 Company (NASDAQ:WDFC), and RingCentral Inc (NYSE:RNG). This group of stocks’ market valuations match PRGS’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PLKI | 12 | 148716 | -3 |
| DDD | 12 | 93246 | -5 |
| WDFC | 7 | 61943 | 1 |
| RNG | 29 | 193797 | 7 |
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $124 million. That figure was $59 million in PRGS’s case. RingCentral Inc (NYSE:RNG) is the most popular stock in this table. On the other hand WD-40 Company (NASDAQ:WDFC) is the least popular one with only 7 bullish hedge fund positions. Progress Software Corporation (NASDAQ:PRGS) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard RNG might be a better candidate to consider a long position.
