Is PROS Holdings (PRO) a Smart Long-term Buy?

Brown Capital Management Small Company Fund recently released its Q3 2020 Investor Letter, a copy of which you can download here. The fund posted a return of 5.35% (instl. class) for the quarter, underperforming its benchmark, the Russell 2,000 Growth Index which returned 7.16% in the same quarter. You should check out Brown Capital Management’s top 5 stock picks for investors to buy right now, which could be the biggest winners of 2021.

In the Q3 2020 Investor Letter, Brown Capital Management highlighted a few stocks and PROS Holdings Inc. (NYSE:PRO) is one of them. PROS Holdings Inc. (NYSE:PRO) offers artificial intelligence (AI) solutions that power commerce in the digital economy worldwide. Year-to-date, PROS Holdings Inc. (NYSE:PRO) stock lost 17.8% and on December 15th it had a closing price of $49.23. Here is what Brown Capital Management said:

“PROS Holdings uses software embedded with artificial intelligence and machine-learning algorithms to help customers optimize pricing for their products and services. PROS’ beginnings were in providing data analytics and dynamic pricing to the airline industry, and the company has become a dominant provider of pricing optimization for companies in the travel vertical. PROS has since developed a suite of products for companies that sell to other businesses, commonly known as B2B (Business to Business) companies. PROS’ digital pricing and CPQ (configure, price, quote) software enables B2B customers to offer consistent pricing across physical and digital channels, while optimizing pricing and profitability. The software helps B2B customers digitize their sales processes, and has seen strong demand in recent years as all types of companies have been under pressure to enable online selling.

Over the past few months, COVID-19 has had an unprecedented impact on airlines, hotels, and other travel and transportation companies. With roughly 45% of revenue coming from the travel industry, PROS has seen several of its customers pause expansions and new purchases, although renewals remain steady. While revenue from other verticals has been more resilient, it has not been immune from coronavirus-related slowdown in new business activity. As a result, PROS has experienced a meaningful slowdown in revenue growth this year, which has likely weighed on the company’s performance. While the travel vertical is likely to see a long road to recovery, PROS’ software remains critical to airline and other travel customers. We see a large market opportunity in the B2B space and expect growth to recover faster in this market.”

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In Q2 2020, the number of bullish hedge fund positions on PROS Holdings Inc. (NYSE:PRO) stock increased by about 19% from the previous quarter (see the chart here), so a number of other hedge fund managers believe in PRO’s growth potential. Our calculations showed that PROS Holdings Inc. (NYSE:PRO) isn’t ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

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Disclosure: None. This article is originally published at Insider Monkey.