Many investors, including Paul Tudor Jones or Stan Druckenmiller, have been saying before last year’s Q4 market crash that the stock market is overvalued due to a low interest rate environment that leads to companies swapping their equity for debt and focusing mostly on short-term performance such as beating the quarterly earnings estimates. In the first half of 2019, most investors recovered all of their Q4 losses as sentiment shifted and optimism dominated the US China trade negotiations. Nevertheless, many of the stocks that delivered strong returns in the first half still sport strong fundamentals and their gains were more related to the general market sentiment rather than their individual performance and hedge funds kept their bullish stance. In this article we will find out how hedge fund sentiment to Agilysys, Inc. (NASDAQ:AGYS) changed recently.
Is Agilysys, Inc. (NASDAQ:AGYS) an outstanding investment today? Money managers are betting on the stock. The number of bullish hedge fund positions improved by 3 lately. Our calculations also showed that AGYS isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
According to most investors, hedge funds are perceived as underperforming, old financial vehicles of yesteryear. While there are more than 8000 funds in operation at the moment, Our experts hone in on the masters of this club, approximately 750 funds. These hedge fund managers orchestrate bulk of all hedge funds’ total capital, and by keeping an eye on their finest investments, Insider Monkey has revealed several investment strategies that have historically beaten the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points per year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Jim Simons of Renaissance Technologies
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. We’re going to go over the key hedge fund action surrounding Agilysys, Inc. (NASDAQ:AGYS).
Hedge fund activity in Agilysys, Inc. (NASDAQ:AGYS)
Heading into the fourth quarter of 2019, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 23% from the previous quarter. By comparison, 12 hedge funds held shares or bullish call options in AGYS a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, MAK Capital One, managed by Michael Kaufman, holds the biggest position in Agilysys, Inc. (NASDAQ:AGYS). MAK Capital One has a $61.7 million position in the stock, comprising 24.7% of its 13F portfolio. Coming in second is Headlands Capital, led by David Park, holding a $16.6 million position; 11.6% of its 13F portfolio is allocated to the company. Remaining professional money managers with similar optimism comprise Renaissance Technologies, Israel Englander’s Millennium Management and Chuck Royce’s Royce & Associates. In terms of the portfolio weights assigned to each position MAK Capital One allocated the biggest weight to Agilysys, Inc. (NASDAQ:AGYS), around 24.66% of its 13F portfolio. Headlands Capital is also relatively very bullish on the stock, setting aside 11.62 percent of its 13F equity portfolio to AGYS.
As industrywide interest jumped, key hedge funds have been driving this bullishness. Citadel Investment Group, managed by Ken Griffin, created the largest position in Agilysys, Inc. (NASDAQ:AGYS). Citadel Investment Group had $0.8 million invested in the company at the end of the quarter. David Harding’s Winton Capital Management also made a $0.3 million investment in the stock during the quarter. The only other fund with a brand new AGYS position is Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Agilysys, Inc. (NASDAQ:AGYS) but similarly valued. These stocks are United Insurance Holdings Corp.(NDA) (NASDAQ:UIHC), Huami Corporation (NYSE:HMI), Koppers Holdings Inc. (NYSE:KOP), and Ruhnn Holding Limited (NASDAQ:RUHN). This group of stocks’ market values are similar to AGYS’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UIHC | 11 | 13753 | 3 |
| HMI | 4 | 6091 | -2 |
| KOP | 13 | 40987 | 1 |
| RUHN | 1 | 115 | -1 |
| Average | 7.25 | 15237 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.25 hedge funds with bullish positions and the average amount invested in these stocks was $15 million. That figure was $129 million in AGYS’s case. Koppers Holdings Inc. (NYSE:KOP) is the most popular stock in this table. On the other hand Ruhnn Holding Limited (NASDAQ:RUHN) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Agilysys, Inc. (NASDAQ:AGYS) is more popular among hedge funds. 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 AGYS wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on AGYS were disappointed as the stock returned -1.1% during the first two months of the fourth quarter 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
