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This Metric Says You Are Smart to Sell Agilysys, Inc. (AGYS)

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Is Agilysys, Inc. (NASDAQ:AGYS) the right investment to pursue these days? Investors who are in the know are taking a bearish view. The number of long hedge fund positions stayed the same which is a slightly negative development in our experience

In the eyes of most investors, hedge funds are assumed to be slow, old investment tools of years past. While there are over 8000 funds in operation at the moment, we at Insider Monkey look at the upper echelon of this club, about 450 funds. It is estimated that this group oversees the majority of the hedge fund industry’s total capital, and by paying attention to their top stock picks, we have deciphered a number of investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

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Just as important, positive insider trading activity is another way to parse down the world of equities. Just as you’d expect, there are a variety of stimuli for a bullish insider to get rid of shares of his or her company, but only one, very obvious reason why they would behave bullishly. Many academic studies have demonstrated the useful potential of this strategy if piggybackers know where to look (learn more here).

With all of this in mind, it’s important to take a glance at the key action encompassing Agilysys, Inc. (NASDAQ:AGYS).

Hedge fund activity in Agilysys, Inc. (NASDAQ:AGYS)

At the end of the first quarter, a total of 5 of the hedge funds we track were long in this stock, a change of 0% from the previous quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings significantly.

When looking at the hedgies we track, MAK Capital One, managed by Michael Kaufman, holds the biggest position in Agilysys, Inc. (NASDAQ:AGYS). MAK Capital One has a $77.4 million position in the stock, comprising 12.3% of its 13F portfolio. Sitting at the No. 2 spot is Royce & Associates, managed by Chuck Royce, which held a $4.1 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other hedgies that are bullish include Jim Simons’s Renaissance Technologies, D. E. Shaw’s D E Shaw and George Soros’s Soros Fund Management.

Since Agilysys, Inc. (NASDAQ:AGYS) has experienced falling interest from hedge fund managers, it’s safe to say that there exists a select few funds that elected to cut their entire stakes in Q1. Interestingly, Cliff Asness’s AQR Capital Management dropped the biggest stake of the 450+ funds we track, worth an estimated $0.1 million in stock. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Insider trading activity in Agilysys, Inc. (NASDAQ:AGYS)

Bullish insider trading is best served when the company in focus has seen transactions within the past half-year. Over the latest 180-day time period, Agilysys, Inc. (NASDAQ:AGYS) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Agilysys, Inc. (NASDAQ:AGYS). These stocks are Unwired Planet Inc (NASDAQ:UPIP), Market Leader Inc (NASDAQ:LEDR), QAD Inc. (NASDAQ:QADA), American Software, Inc. (NASDAQ:AMSWA), and Zix Corporation (NASDAQ:ZIXI). This group of stocks are in the application software industry and their market caps are similar to AGYS’s market cap.

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