Is Proofpoint Inc (NASDAQ:PFPT) a superb stock to buy now? The best stock pickers are becoming more confident. The number of long hedge fund bets increased by 5 recently.
According to most stock holders, hedge funds are assumed to be slow, outdated financial vehicles of the past. While there are over 8000 funds in operation at the moment, we at Insider Monkey hone in on the top tier of this group, around 450 funds. It is estimated that this group controls the majority of the smart money’s total capital, and by paying attention to their highest performing investments, we have found a few investment strategies that have historically outpaced the S&P 500 index. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).
Equally as important, bullish insider trading activity is a second way to parse down the financial markets. Just as you’d expect, there are lots of incentives for an upper level exec to drop shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Several empirical studies have demonstrated the valuable potential of this tactic if you know what to do (learn more here).
Now, let’s take a glance at the key action surrounding Proofpoint Inc (NASDAQ:PFPT).
How have hedgies been trading Proofpoint Inc (NASDAQ:PFPT)?
At the end of the fourth quarter, a total of 6 of the hedge funds we track held long positions in this stock, a change of 500% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their stakes substantially.
As aggregate interest increased, key hedge funds have been driving this bullishness. Polar Capital, managed by Brian Ashford-Russell and Tim Woolley, initiated the largest position in Proofpoint Inc (NASDAQ:PFPT). Polar Capital had 1.5 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $0.5 million position during the quarter. The following funds were also among the new PFPT investors: Mike Vranos’s Ellington, Jim Simons’s Renaissance Technologies, and D. E. Shaw’s D E Shaw.
How are insiders trading Proofpoint Inc (NASDAQ:PFPT)?
Insider buying is particularly usable when the company we’re looking at has seen transactions within the past 180 days. Over the last 180-day time frame, Proofpoint Inc (NASDAQ:PFPT) has experienced zero unique insiders buying, and 6 insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to Proofpoint Inc (NASDAQ:PFPT). These stocks are E2open Inc (NASDAQ:EOPN), AutoNavi Holdings Ltd (ADR) (NASDAQ:AMAP), Bazaarvoice Inc (NASDAQ:BV), SciQuest, Inc. (NASDAQ:SQI), and Accelrys, Inc. (NASDAQ:ACCL). This group of stocks are in the application software industry and their market caps are closest to PFPT’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| E2open Inc (NASDAQ:EOPN) | 3 | 0 | 7 |
| AutoNavi Holdings Ltd (ADR) (NASDAQ:AMAP) | 7 | 0 | 0 |
| Bazaarvoice Inc (NASDAQ:BV) | 4 | 0 | 5 |
| SciQuest, Inc. (NASDAQ:SQI) | 7 | 0 | 2 |
| Accelrys, Inc. (NASDAQ:ACCL) | 6 | 0 | 5 |
With the results exhibited by our studies, everyday investors should always pay attention to hedge fund and insider trading sentiment, and Proofpoint Inc (NASDAQ:PFPT) is no exception.
