We at Insider Monkey have gone over 752 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of September 30th. In this article, we look at what those funds think of PRGX Global Inc (NASDAQ:PRGX) based on that data.
Hedge fund interest in PRGX Global Inc (NASDAQ:PRGX) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare PRGX to other stocks including StealthGas Inc. (NASDAQ:GASS), GigCapital, Inc. (NYSE:GIG), and Intevac, Inc. (NASDAQ:IVAC) to get a better sense of its popularity. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
[caption id="attachment_339354" align="aligncenter" width="500"] Matthew Drapkin of Becker Drapkin Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. Let's take a look at the latest hedge fund action surrounding PRGX Global Inc (NASDAQ:PRGX).
Hedge fund activity in PRGX Global Inc (NASDAQ:PRGX)
At the end of the third quarter, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards PRGX over the last 17 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Headlands Capital held the most valuable stake in PRGX Global Inc (NASDAQ:PRGX), which was worth $15.2 million at the end of the third quarter. On the second spot was Becker Drapkin Management which amassed $10.4 million worth of shares. Renaissance Technologies, Cannell Capital, and Trellus Management Company were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Becker Drapkin Management allocated the biggest weight to PRGX Global Inc (NASDAQ:PRGX), around 13.84% of its 13F portfolio. Headlands Capital is also relatively very bullish on the stock, earmarking 10.63 percent of its 13F equity portfolio to PRGX.
Because PRGX Global Inc (NASDAQ:PRGX) has witnessed bearish sentiment from hedge fund managers, it's easy to see that there lies a certain "tier" of money managers that slashed their positions entirely last quarter. At the top of the heap, Israel Englander's Millennium Management sold off the biggest stake of all the hedgies watched by Insider Monkey, totaling close to $0.1 million in stock, and Gavin Saitowitz and Cisco J. del Valle's Springbok Capital was right behind this move, as the fund cut about $0 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as PRGX Global Inc (NASDAQ:PRGX) but similarly valued. We will take a look at StealthGas Inc. (NASDAQ:GASS), GigCapital, Inc. (NYSE:GIG), Intevac, Inc. (NASDAQ:IVAC), and VAALCO Energy, Inc. (NYSE:EGY). This group of stocks' market valuations are closest to PRGX's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GASS,5,45969,-1 GIG,5,21479,-1 IVAC,6,19985,1 EGY,8,15400,0 Average,6,25708,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $26 million. That figure was $38 million in PRGX's case. VAALCO Energy, Inc. (NYSE:EGY) is the most popular stock in this table. On the other hand StealthGas Inc. (NASDAQ:GASS) is the least popular one with only 5 bullish hedge fund positions. PRGX Global Inc (NASDAQ:PRGX) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately PRGX wasn't nearly as popular as these 20 stocks and hedge funds that were betting on PRGX were disappointed as the stock returned -12.6% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.