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Hedge Funds Cashing Out Of Agilysys, Inc. (AGYS)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. What do these smart investors think about Agilysys, Inc. (NASDAQ:AGYS)?

Agilysys, Inc. (NASDAQ:AGYS) investors should be aware of a decrease in hedge fund interest lately. AGYS was in 14 hedge funds’ portfolios at the end of March. There were 16 hedge funds in our database with AGYS holdings at the end of the previous quarter. Our calculations also showed that AGYS isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Peter Rathjens Arrowstreet Capital 394

Peter Rathjens of Arrowstreet Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology’s influence will go beyond online payments. So, we are checking out this futurist’s moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to go over the new hedge fund action surrounding Agilysys, Inc. (NASDAQ:AGYS).

How are hedge funds trading Agilysys, Inc. (NASDAQ:AGYS)?

At Q1’s end, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards AGYS over the last 18 quarters. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).

More specifically, MAK Capital One was the largest shareholder of Agilysys, Inc. (NASDAQ:AGYS), with a stake worth $40.1 million reported as of the end of September. Trailing MAK Capital One was Renaissance Technologies, which amassed a stake valued at $11 million. Nine Ten Partners, Royce & Associates, and Arrowstreet Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position MAK Capital One allocated the biggest weight to Agilysys, Inc. (NASDAQ:AGYS), around 35.34% of its 13F portfolio. Nine Ten Partners is also relatively very bullish on the stock, setting aside 3.94 percent of its 13F equity portfolio to AGYS.

Because Agilysys, Inc. (NASDAQ:AGYS) has witnessed a decline in interest from the smart money, logic holds that there is a sect of funds who sold off their positions entirely last quarter. It’s worth mentioning that Israel Englander’s Millennium Management sold off the largest stake of the 750 funds watched by Insider Monkey, valued at close to $10.1 million in stock, and Peter Algert and Kevin Coldiron’s Algert Coldiron Investors was right behind this move, as the fund dropped about $0.6 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 2 funds last quarter.

Let’s also examine hedge fund activity in other stocks similar to Agilysys, Inc. (NASDAQ:AGYS). We will take a look at City Office REIT Inc (NYSE:CIO), Community Health Systems, Inc. (NYSE:CYH), Gilat Satellite Networks Ltd. (NASDAQ:GILT), and Mechel PAO (NYSE:MTL). This group of stocks’ market values resemble AGYS’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CIO 15 34627 2
CYH 20 159301 4
GILT 13 50128 11
MTL 3 1432 1
Average 12.75 61372 4.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $61 million. That figure was $86 million in AGYS’s case. Community Health Systems, Inc. (NYSE:CYH) is the most popular stock in this table. On the other hand Mechel PAO (NYSE:MTL) is the least popular one with only 3 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 13.3% in 2020 through June 25th but beat the market by 16.8 percentage points. Unfortunately AGYS wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on AGYS were disappointed as the stock returned 4% during the same time period 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 many of these stocks already outperformed the market so far this year.

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