Keeping this in mind, let’s analyze whether Proofpoint Inc (NASDAQ:PFPT) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market when we factor in known risk factors.
Proofpoint Inc (NASDAQ:PFPT) was in 35 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 45. PFPT investors should pay attention to an increase in support from the world’s most elite money managers lately. There were 27 hedge funds in our database with PFPT holdings at the end of March. Our calculations also showed that PFPT isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
At the moment there are tons of indicators stock traders employ to evaluate stocks. Some of the most innovative indicators are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the top picks of the best hedge fund managers can trounce the S&P 500 by a very impressive amount (see the details here).
At Insider Monkey we scour multiple sources to uncover the next great investment idea. Last week, most investors overlooked a major development because of the presidential elections: Oregon became the first state to legalize psychedelic mushrooms which are shown to have promising results in treating depression, addiction, and PTSD in early stage academic studies. So, we are checking out this psychedelic drug stock idea right now. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. Now let’s check out the key hedge fund action encompassing Proofpoint Inc (NASDAQ:PFPT).
How have hedgies been trading Proofpoint Inc (NASDAQ:PFPT)?
At Q2’s end, a total of 35 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 30% from the first quarter of 2020. By comparison, 36 hedge funds held shares or bullish call options in PFPT a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Proofpoint Inc (NASDAQ:PFPT) was held by Alyeska Investment Group, which reported holding $122.6 million worth of stock at the end of June. It was followed by RGM Capital with a $108.7 million position. Other investors bullish on the company included Citadel Investment Group, Renaissance Technologies, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position RGM Capital allocated the biggest weight to Proofpoint Inc (NASDAQ:PFPT), around 6.54% of its 13F portfolio. Crosslink Capital is also relatively very bullish on the stock, setting aside 2.81 percent of its 13F equity portfolio to PFPT.
As one would reasonably expect, some big names have jumped into Proofpoint Inc (NASDAQ:PFPT) headfirst. Praesidium Investment Management Company, managed by Kevin Oram and Peter Uddo, created the largest position in Proofpoint Inc (NASDAQ:PFPT). Praesidium Investment Management Company had $21.5 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also made a $13.4 million investment in the stock during the quarter. The following funds were also among the new PFPT investors: Steve Cohen’s Point72 Asset Management, Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management, and Parvinder Thiara’s Athanor Capital.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Proofpoint Inc (NASDAQ:PFPT) but similarly valued. We will take a look at Gentex Corporation (NASDAQ:GNTX), Pentair plc (NYSE:PNR), Bruker Corporation (NASDAQ:BRKR), TIM Participacoes SA (NYSE:TSU), Anaplan, Inc. (NYSE:PLAN), MKS Instruments, Inc. (NASDAQ:MKSI), and PRA Health Sciences Inc (NASDAQ:PRAH). This group of stocks’ market valuations are closest to PFPT’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.7 hedge funds with bullish positions and the average amount invested in these stocks was $590 million. That figure was $488 million in PFPT’s case. Anaplan, Inc. (NYSE:PLAN) is the most popular stock in this table. On the other hand TIM Participacoes SA (NYSE:TSU) is the least popular one with only 15 bullish hedge fund positions. Proofpoint Inc (NASDAQ:PFPT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PFPT is 62.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 23% in 2020 through October 30th and beat the market again by 20.1 percentage points. Unfortunately PFPT wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on PFPT were disappointed as the stock returned -13.8% since the end of June (through 10/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.