2016 was undoubtedly a meager one in terms of IPO activity. There were just 105 U.S IPOs last year, down from 170 in 2015 and 275 in 2014. Proceeds from U.S IPOs also fell heavily, to just $18.8 billion in 2016 from $86.6 billion in 2014. However, the IPO picture did improve somewhat in the fourth quarter of last year, as 30 companies went public, and that momentum has carried over into 2017, with Snap Inc (NYSE:SNAP)’s much heralded IPO being one of 25 so far this year. Those IPOs have raised nearly $10 billion in proceeds in 2017, or more than half of the proceeds that were raised throughout all of 2016 according to Renaissance Capital.
Among the many companies that went public in the final quarter of 2016, top hedge funds (including some of the 140 biggest and most famous activist hedge funds) were quite interested in several of them, buying up their shares to become some of their biggest shareholders. We track over 700 hedge funds and other institutional investors and analyze their quarterly 13F filings to identify stocks that they are collectively bullish on. One strategy that we have developed using this data has outperformed the market over the last year, and involves selecting the 100 best-performing funds in our system and identifying the 30 mid-cap stocks that they are the most bullish on collectively. Over the past year, this strategy generated returns of 39.7%, topping the 24.1% gain registered by S&P 500 ETFs. Insider Monkey’s enhanced small-cap strategy has also registered gains of more than 45% over the last 12 months and outperformed the SPY by more than 30 percentage points in the last 4.5 years (see the details).
In this article, we’ve applied the same basic principle to last quarter’s IPOs and come out with a list of the five IPOs that the hedge funds in our system liked the most. We’ll analyze their performance and backers in this article.
5. GTY Technology Holdings Inc (NASDAQ:GTYH)
Top Hedge Fund Backers: 1. Elliott Associates (4.4 million shares) 2. Moore Capital Management (2.83 million shares) 3. Fir Tree (1.9 million shares)
GTY Technology Holdings Inc (NASDAQ:GTYH)’s IPO was a somewhat confusing one, as it initially went public on October 27 at $10 per share, before the stock was later split into three classes of shares, with the ticker symbol GTYH representing its Class A shares, and GTYHW representing its warrants (which are equal to one class A share). That didn’t stop 19 hedge funds that we track from buying 34.8% of GTY Technology’s shares in the fourth quarter, a higher ownership percentage than any of the other IPOs on the list.
A blank check company, it’s expected that GTY Technology Holdings Inc (NASDAQ:GTYH) will seek out a technology-related partnership, though the company has claimed that it’s open to deals in any business or industry. The company was founded in 2016 by William Green, Joe Tucci, and Harry You. Mr. Green served as Accenture Plc (NYSE:ACN)’s CEO for seven years, while Mr. Tucci was the CEO of EMC, which was purchased by Dell Inc. (NASDAQ:DELL) for $67 billion last year. Mr. You previously worked for both EMC and Accenture, among other companies.