Here is What Hedge Funds Think About PROS Holdings, Inc. (PRO)

World-class money managers like Bill Ackman and Barry Rosenstein only invest their wealthy clients’ money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It’s not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It’s also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.

PROS Holdings, Inc. (NYSE:PRO) has seen an increase in hedge fund interest of late. 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 Flamel Technologies S.A. (ADR) (NASDAQ:FLML), Intersect ENT Inc (NASDAQ:XENT), and Eastman Kodak Co. (NYSE:KODK) to gather more data points.

In today’s marketplace there are dozens of metrics, market participants have at their disposal to size up their holdings. A couple of the less utilized metrics are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the best money managers can trounce the S&P 500 by a solid amount (see the details here).

With all of this in mind, we’re going to take a look at the new action encompassing PROS Holdings, Inc. (NYSE:PRO).

Hedge fund activity in PROS Holdings, Inc. (NYSE:PRO)

At Q3’s end, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a surge of 25% from the previous quarter. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Cadian Capital, managed by Eric Bannasch, holds the number one position in PROS Holdings, Inc. (NYSE:PRO), worth an estimated $53.6 million, comprising 1.9% of its 13F portfolio. The second largest stake is held by Dorsal Capital Management, led by Ryan Frick and Oliver Evans, holding a $22.1 million position; 2% of its 13F portfolio is allocated to the company. Other professional money managers that hold long positions consist of Bill Miller’s Legg Mason Capital Management, D. E. Shaw’s D E Shaw and Ken Griffin’s Citadel Investment Group.

As industrywide interest jumped, some big names were breaking ground themselves. D E Shaw, managed by D. E. Shaw, created the most outsized position in PROS Holdings, Inc. (NYSE:PRO). The fund had $0.2 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made an $0.2 million investment in the stock during the quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as PROS Holdings, Inc. (NYSE:PRO) but similarly valued. We will take a look at Flamel Technologies S.A. (ADR) (NASDAQ:FLML), Intersect ENT Inc (NASDAQ:XENT), Eastman Kodak Co. (NYSE:KODK), and Cincinnati Bell Inc. (NYSE:CBB). This group of stocks’ market values are closest to PRO’s market value.

As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $123 million. That figure was $80 million in PRO’s case, a rather negative sign. While Intersect ENT Inc (NASDAQ:XENT) is preferred by a larger number of hedge funds, Eastman Kodak Co. (NYSE:KODK) has lost some of its appeal, with only 11 bullish hedge fund positions reported at the end of the quarter. Compared to these stocks PROS Holdings, Inc. (NYSE:PRO) is even less popular than KODK. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.