Should You Buy Proofpoint Inc (PFPT)?

Out of thousands of stocks that are currently traded on the market, it is difficult to determine those that can really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of over 700 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Proofpoint Inc (NASDAQ:PFPT).

Hedge fund interest in Proofpoint Inc (NASDAQ:PFPT) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare PFPT to other stocks including SINA Corp (NASDAQ:SINA), EverBank Financial Corp (NYSE:EVER), and KBR, Inc. (NYSE:KBR) to get a better sense of its popularity.

Now, we’re going to take a peek at the new action surrounding Proofpoint Inc (NASDAQ:PFPT).

What does the smart money think about Proofpoint Inc (NASDAQ:PFPT)?

Heading into Q4, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Columbus Circle Investors has the largest position in Proofpoint Inc (NASDAQ:PFPT), worth close to $82 million, accounting for 0.7% of its total 13F portfolio. Sitting at the No. 2 spot is Jericho Capital Asset Management, led by Josh Resnick, holding a $37.3 million position; the fund has 2.3% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish include Daniel Benton’s Andor Capital Management, Brian Ashford-Russell and Tim Woolley’s Polar Capital and Glen Kacher’s Light Street Capital.

Intriguingly, John Burbank’s Passport Capital said goodbye to the largest stake of all the hedgies followed by Insider Monkey, worth about $3.4 million in call options., and Israel Englander’s Millennium Management was right behind this move, as the fund said goodbye to about $3.2 million worth. These transactions are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Proofpoint Inc (NASDAQ:PFPT) but similarly valued. We will take a look at SINA Corp (NASDAQ:SINA), EverBank Financial Corp (NYSE:EVER), KBR, Inc. (NYSE:KBR), and Dycom Industries, Inc. (NYSE:DY). This group of stocks’ market caps are similar to PFPT’s market cap.

As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $440 million. That figure was $269 million in PFPT’s case. KBR, Inc. (NYSE:KBR) is the most popular stock in this table. On the other hand EverBank Financial Corp (NYSE:EVER) is the least popular one with only 8 bullish hedge fund positions. Proofpoint Inc (NASDAQ:PFPT) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard KBR might be a better candidate to consider a long position.