Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the second quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Progress Software Corporation (NASDAQ:PRGS) based on that data and determine whether they were really smart about the stock.
Progress Software Corporation (NASDAQ:PRGS) investors should be aware of an increase in hedge fund interest in recent months. Progress Software Corporation (NASDAQ:PRGS) was in 27 hedge funds' portfolios at the end of the second quarter of 2020. The all time high for this statistics is 25. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 22 hedge funds in our database with PRGS positions at the end of the first quarter. Our calculations also showed that PRGS isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
To the average investor there are numerous indicators investors employ to assess stocks. Two of the most underrated indicators are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the top picks of the top money managers can beat the S&P 500 by a significant margin (see the details here).
Bruce Kovner of Caxton Associates LP
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox. Keeping this in mind let's check out the key hedge fund action encompassing Progress Software Corporation (NASDAQ:PRGS).
How have hedgies been trading Progress Software Corporation (NASDAQ:PRGS)?
Heading into the third quarter of 2020, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 23% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in PRGS over the last 20 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Progress Software Corporation (NASDAQ:PRGS), which was worth $99.6 million at the end of the third quarter. On the second spot was Praesidium Investment Management Company which amassed $32.2 million worth of shares. GLG Partners, Fisher Asset Management, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Praesidium Investment Management Company allocated the biggest weight to Progress Software Corporation (NASDAQ:PRGS), around 2.09% of its 13F portfolio. AlphaCrest Capital Management is also relatively very bullish on the stock, designating 0.26 percent of its 13F equity portfolio to PRGS.
As aggregate interest increased, specific money managers have been driving this bullishness. Athanor Capital, managed by Parvinder Thiara, created the largest position in Progress Software Corporation (NASDAQ:PRGS). Athanor Capital had $1.1 million invested in the company at the end of the quarter. Matthew Hulsizer's PEAK6 Capital Management also made a $1.1 million investment in the stock during the quarter. The other funds with brand new PRGS positions are Dmitry Balyasny's Balyasny Asset Management, Michael Gelband's ExodusPoint Capital, and Bruce Kovner's Caxton Associates LP.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Progress Software Corporation (NASDAQ:PRGS) but similarly valued. These stocks are FS KKR Capital Corp. (NYSE:FSK), I-Mab (NASDAQ:IMAB), Zentalis Pharmaceuticals, Inc. (NASDAQ:ZNTL), Rambus Inc. (NASDAQ:RMBS), Liberty Latin America Ltd. (NASDAQ:LILAK), Fitbit Inc (NYSE:FIT), and Moelis & Company (NYSE:MC). This group of stocks' market values are closest to PRGS's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FSK,11,90364,-8 IMAB,3,37688,-1 ZNTL,11,785787,11 RMBS,18,147133,5 LILAK,27,251802,2 FIT,30,350584,4 MC,8,48802,-2 Average,15.4,244594,1.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.4 hedge funds with bullish positions and the average amount invested in these stocks was $245 million. That figure was $254 million in PRGS's case. Fitbit Inc (NYSE:FIT) is the most popular stock in this table. On the other hand I-Mab (NASDAQ:IMAB) is the least popular one with only 3 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 84.4. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 21.3% in 2020 through September 25th and beat the market by 17.7 percentage points. Unfortunately PRGS wasn't nearly as popular as these 10 stocks and hedge funds that were betting on PRGS were disappointed as the stock returned -7.4% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.