Does PRGX Global Inc (PRGX) Stack Up Against Its Peers?

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.

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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.

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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.

Since PRGX Global Inc (NASDAQ:PRGX) has faced a decline in interest from the smart money, it’s easy to see that there is a sect of money managers who were dropping their positions entirely last quarter. It’s worth mentioning that Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s GRT Capital Partners said goodbye to the largest investment of the 700 funds tracked by Insider Monkey, valued at about $0.1 million in stock. Peter Algert and Kevin Coldiron’s fund, Algert Coldiron Investors, also cut its $0.1 million worth of shares.

Let’s go over hedge fund activity in other stocks similar to PRGX Global Inc (NASDAQ:PRGX). We will take a look at pSivida Corp. (NASDAQ:PSDV), TESSCO Technologies, Inc. (NASDAQ:TESS), Aradigm Corporation (NASDAQ:ARDM), and ReneSola Ltd. (ADR) (NYSE:SOL). This group of stocks’ market valuations are similar to PRGX’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PSDV 6 19879 0
TESS 3 13571 0
ARDM 3 10117 -1
SOL 2 8226 -2

As you can see these stocks had an average of 4 hedge funds with bullish positions and the average amount invested in these stocks was $13 million. That figure was $28 million in PRGX’s case. pSivida Corp. (NASDAQ:PSDV) is the most popular stock in this table. On the other hand ReneSola Ltd. (ADR) (NYSE:SOL) is the least popular one with only 2 bullish hedge fund positions. PRGX Global Inc (NASDAQ:PRGX) is tied as the most popular stock in this group and has more money invested in it than any of the other stocks. This is a positive signal, as we’d rather spend our time researching stocks that hedge funds are piling on. In this regard PRGX might be a good candidate to consider taking a long position in.

Disclosure: None