Hedge Funds Are Getting More Bullish On Agilysys, Inc. (AGYS)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Agilysys, Inc. (NASDAQ:AGYS) based on that data and determine whether they were really smart about the stock.

Agilysys, Inc. (NASDAQ:AGYS) shareholders have witnessed an increase in activity from the world’s largest hedge funds of late. Agilysys, Inc. (NASDAQ:AGYS) was in 19 hedge funds’ portfolios at the end of June. The all time high for this statistics is 17. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 14 hedge funds in our database with AGYS positions at the end of the first quarter. Our calculations also showed that AGYS 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.

According to most stock holders, hedge funds are assumed to be worthless, outdated investment vehicles of the past. While there are greater than 8000 funds with their doors open at the moment, Our researchers look at the masters of this club, approximately 850 funds. Most estimates calculate that this group of people administer the majority of the hedge fund industry’s total asset base, and by watching their top stock picks, Insider Monkey has come up with several investment strategies that have historically exceeded the market. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Donald Sussman Paloma Partners

Donald Sussman of Paloma Partners

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. 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. With all of this in mind we’re going to take a look at the fresh hedge fund action surrounding Agilysys, Inc. (NASDAQ:AGYS).

What have hedge funds been doing with Agilysys, Inc. (NASDAQ:AGYS)?

Heading into the third quarter of 2020, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 36% from one quarter earlier. By comparison, 13 hedge funds held shares or bullish call options in AGYS a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Agilysys, Inc. (NASDAQ:AGYS) was held by MAK Capital One, which reported holding $74.2 million worth of stock at the end of September. It was followed by Nine Ten Partners with a $14.7 million position. Other investors bullish on the company included Renaissance Technologies, Royce & Associates, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position MAK Capital One allocated the biggest weight to Agilysys, Inc. (NASDAQ:AGYS), around 37.83% of its 13F portfolio. Nine Ten Partners is also relatively very bullish on the stock, dishing out 3.68 percent of its 13F equity portfolio to AGYS.

Now, specific money managers were breaking ground themselves. Driehaus Capital, managed by Richard Driehaus, assembled the biggest position in Agilysys, Inc. (NASDAQ:AGYS). Driehaus Capital had $4.6 million invested in the company at the end of the quarter. Touk Sinantha’s AltraVue Capital also made a $2.2 million investment in the stock during the quarter. The other funds with new positions in the stock are David Harding’s Winton Capital Management, Michael Gelband’s ExodusPoint Capital, and Donald Sussman’s Paloma Partners.

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 Verso Corporation (NYSE:VRS), Garrett Motion Inc. (NYSE:GTX), Comtech Telecommunications Corp. (NASDAQ:CMTL), Prothena Corporation plc (NASDAQ:PRTA), Heidrick & Struggles International, Inc. (NASDAQ:HSII), At Home Group Inc. (NYSE:HOME), and American Vanguard Corp. (NYSE:AVD). This group of stocks’ market valuations resemble AGYS’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
VRS 15 80182 -5
GTX 16 143426 -5
CMTL 13 55524 -5
PRTA 25 228138 5
HSII 16 81931 3
HOME 27 169749 13
AVD 10 10023 2
Average 17.4 109853 1.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.4 hedge funds with bullish positions and the average amount invested in these stocks was $110 million. That figure was $135 million in AGYS’s case. At Home Group Inc. (NYSE:HOME) is the most popular stock in this table. On the other hand American Vanguard Corp. (NYSE:AVD) is the least popular one with only 10 bullish hedge fund positions. Agilysys, Inc. (NASDAQ:AGYS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AGYS is 66.5. 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. 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 24.8% in 2020 through the end of third quarter and still beat the market by 19.3 percentage points. Hedge funds were also right about betting on AGYS as the stock returned 34.7% during Q3 and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.