Prescott Group is Betting Big on These Micro-Cap Stocks for Q2

#3 Servicesource International Inc (NASDAQ:SREV)

 – Shares Held by Prescott Group Capital Management (as of March 31): 3.57 million

 – Value of Holding (as of March 31): $15.20 million

Moving on, Prescott Group Capital Management increased its holding in Servicesource International Inc (NASDAQ:SREV) by 3% during the first quarter. Servicesource International Inc (NASDAQ:SREV)’s stock has declined by over 80% from the high of $22 that it hit in 2011, the year that the company had its IPO, and has lost 12.4% of its value so far this year. The enterprise cloud solutions company is expected to report its first quarter results next week and the consensus among analysts is for it to report a loss of $0.03 per share on revenue of $58.36 million, which would both represent year-over-year declines. The stock currently sports an average rating of ‘Overweight’ and an average price target of $6.17 from the three prominent analysts and research firms on the Street that track it. Investors that initiated a stake in Servicesource International during the fourth quarter included Bruce Salomon‘s Elberon Capital, which bought 1.16 million shares of the company.

#2 Nature’s Sunshine Prod. (NASDAQ:NATR)

 – Shares Held by Prescott Group Capital Management (as of March 31): 1.86 million

 – Value of Holding (as of March 31): $17.91 million

Nature’s Sunshine Prod. (NASDAQ:NATR) completed a decade of being a part of Prescott Group Capital Management’s equity portfolio in the first quarter. The fund hasn’t made any changes to its stake in the company over the past several years, with it ranking as the fund’s second-largest holding dating back to early 2013. Shares of Nature’s Sunshine Prod. (NASDAQ:NATR) have been on a gradual decline since September 2013 and have lost over 10% of their value so far this year. However, this decline has helped increase the dividend yield of the stock to 4.18%. Most analysts who track the stock feel that it will continue to underperform however, due to a flawed business model. Analysts assert that nearly all of the company’s products are overpriced and of lower quality compared to similar products from other brands and that this is hampering the company’s ability to recruit new distributors. With ownership of over 2.4 million shares of the company, Willem Mesdag‘s Red Mountain Capital was its largest shareholder at the end of 2015 among the funds in our database.

#1 Air Transport Services Group Inc. (NASDAQ:ATSG)

 – Shares Held by Prescott Group Capital Management (as of March 31): 4.18 million

 – Value of Holding (as of March 31): $63.33 million

Despite Prescott Group Capital Management reducing its stake in Air Transport Services Group Inc. (NASDAQ:ATSG) by 17% during the first quarter, the company remained its top stock pick at the end of that period, where it has also remained since early 2013. Shares of Air Transport Services Group Inc. (NASDAQ:ATSG) rallied significantly  in the first quarter on the back of the company signing a logistics deal with e-commerce behemoth Amazon.com, Inc. (NASDAQ:AMZN). As part of its deal with Amazon.com, Air Transport Services Group will be leasing 20 Boeing 767 freight aircraft to Amazon Fulfillment Services while the former will hold warrants giving it the right to acquire up to a 19.9% stake in the latter over a five-year period. For the first quarter, analysts expect Air Transport Services Group to report EPS of $0.14 on revenue of $167.12 million, compared to the EPS of $0.14 on revenue of $147.02 million it had reported for the same quarter of last year. D.E Shaw, founded by billionaire David E. Shaw, upped its stake in Air Transport Services Group by 10% to 425,065 shares during the fourth quarter.

Disclosure: None