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Hedge Funds Aren’t Crazy About GTY Technology Holdings, Inc. (GTYH)

In this article we will check out the progression of hedge fund sentiment towards GTY Technology Holdings, Inc. (NASDAQ:GTYH) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

GTY Technology Holdings, Inc. (NASDAQ:GTYH) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 5 hedge funds’ portfolios at the end of the first quarter of 2020. At the end of this article we will also compare GTYH to other stocks including Oxford Immunotec Global PLC (NASDAQ:OXFD), MutualFirst Financial, Inc. (NASDAQ:MFSF), and W&T Offshore, Inc. (NYSE:WTI) to get a better sense of its popularity.

Video: Watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Bill Miller

Bill Miller of Miller Value Partners

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to check out the fresh hedge fund action regarding GTY Technology Holdings, Inc. (NASDAQ:GTYH).

What does smart money think about GTY Technology Holdings, Inc. (NASDAQ:GTYH)?

At Q1’s end, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 9 hedge funds with a bullish position in GTYH a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

Is GTYH A Good Stock To Buy?

The largest stake in GTY Technology Holdings, Inc. (NASDAQ:GTYH) was held by Miller Value Partners, which reported holding $8.6 million worth of stock at the end of September. It was followed by Kingdon Capital with a $5.2 million position. Other investors bullish on the company included Alyeska Investment Group, Levin Capital Strategies, and GAMCO Investors. In terms of the portfolio weights assigned to each position Kingdon Capital allocated the biggest weight to GTY Technology Holdings, Inc. (NASDAQ:GTYH), around 0.96% of its 13F portfolio. Miller Value Partners is also relatively very bullish on the stock, designating 0.55 percent of its 13F equity portfolio to GTYH.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Crosslink Capital. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was GAMCO Investors).

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as GTY Technology Holdings, Inc. (NASDAQ:GTYH) but similarly valued. We will take a look at Oxford Immunotec Global PLC (NASDAQ:OXFD), MutualFirst Financial, Inc. (NASDAQ:MFSF), W&T Offshore, Inc. (NYSE:WTI), and Carter Bank & Trust (NASDAQ:CARE). All of these stocks’ market caps are similar to GTYH’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
OXFD 20 101540 3
MFSF 6 27492 -1
WTI 11 17865 -6
CARE 7 10648 2
Average 11 39386 -0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $39 million. That figure was $15 million in GTYH’s case. Oxford Immunotec Global PLC (NASDAQ:OXFD) is the most popular stock in this table. On the other hand MutualFirst Financial, Inc. (NASDAQ:MFSF) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks GTY Technology Holdings, Inc. (NASDAQ:GTYH) is even less popular than MFSF. Hedge funds dodged a bullet by taking a bearish stance towards GTYH. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but managed to beat the market by 13.2 percentage points. Unfortunately GTYH wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); GTYH investors were disappointed as the stock returned -17% during the second quarter (through the end of May) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.

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