Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
Is PRGX Global Inc (NASDAQ:PRGX) the right investment to pursue these days? Money managers are categorically in a bearish mood. The number of long hedge fund bets was slashed by 1 in recent months. PRGX was in 6 hedge funds’ portfolios at the end of September. There were 7 hedge funds in our database with PRGX holdings at the end of June. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as pSivida Corp. (NASDAQ:PSDV), TESSCO Technologies, Inc. (NASDAQ:TESS), and Aradigm Corporation (NASDAQ:ARDM) to gather more data points.
We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.
What does the smart money think about PRGX Global Inc (NASDAQ:PRGX)?
At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a 14% decline from the second quarter of 2016. On the other hand, there were a total of 13 hedge funds with a bullish position in PRGX a year earlier, which shows a much steeper fall during that time. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, David Park’s Headlands Capital has the largest position in PRGX Global Inc (NASDAQ:PRGX), worth close to $13.1 million, corresponding to 10.4% of its total 13F portfolio. On Headlands Capital’s heels is Renaissance Technologies, one of the largest hedge funds in the world, holding a $7.6 million position. Other members of the smart money that are bullish comprise Matthew Drapkin and Steven R. Becker’s Becker Drapkin Management, J. Carlo Cannell’s Cannell Capital, and John Overdeck and David Siegel’s Two Sigma Advisors. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds, which is based on the performance of their 13F long positions in non-micro-cap stocks.