Here is What Hedge Funds Think About Tyler Technologies, Inc. (TYL)

The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Tyler Technologies, Inc. (NYSE:TYL).

Is Tyler Technologies, Inc. (NYSE:TYL) a splendid investment now? Investors who are in the know were getting less optimistic. The number of bullish hedge fund positions decreased by 3 lately. Tyler Technologies, Inc. (NYSE:TYL) was in 30 hedge funds’ portfolios at the end of September. The all time high for this statistic is 36. Our calculations also showed that TYL isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 33 hedge funds in our database with TYL positions at the end of the second quarter.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind we’re going to review the fresh hedge fund action encompassing Tyler Technologies, Inc. (NYSE:TYL).

Michael Gelband of ExodusPoint Capital

Do Hedge Funds Think TYL Is A Good Stock To Buy Now?

At the end of September, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of -9% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in TYL over the last 25 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

The largest stake in Tyler Technologies, Inc. (NYSE:TYL) was held by Echo Street Capital Management, which reported holding $192.8 million worth of stock at the end of September. It was followed by Praesidium Investment Management Company with a $105.3 million position. Other investors bullish on the company included RGM Capital, Citadel Investment Group, and Skye Global Management. In terms of the portfolio weights assigned to each position Praesidium Investment Management Company allocated the biggest weight to Tyler Technologies, Inc. (NYSE:TYL), around 5.83% of its 13F portfolio. RGM Capital is also relatively very bullish on the stock, setting aside 4.42 percent of its 13F equity portfolio to TYL.

Because Tyler Technologies, Inc. (NYSE:TYL) has experienced declining sentiment from the aggregate hedge fund industry, logic holds that there lies a certain “tier” of hedge funds that elected to cut their positions entirely last quarter. Intriguingly, Frank Fu’s CaaS Capital dumped the largest position of all the hedgies monitored by Insider Monkey, worth about $20.6 million in stock. Paul Marshall and Ian Wace’s fund, Marshall Wace LLP, also dropped its stock, about $12.9 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 3 funds last quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Tyler Technologies, Inc. (NYSE:TYL) but similarly valued. These stocks are Hologic, Inc. (NASDAQ:HOLX), Ubiquiti Inc. (NYSE:UI), Seagate Technology Holdings plc (NASDAQ:STX), Hewlett Packard Enterprise Company (NYSE:HPE), Qorvo Inc (NASDAQ:QRVO), Cincinnati Financial Corporation (NASDAQ:CINF), and Ally Financial Inc (NYSE:ALLY). This group of stocks’ market caps are similar to TYL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HOLX 39 716983 -2
UI 20 240246 -3
STX 27 1806109 -4
HPE 33 1002469 -1
QRVO 44 1950993 4
CINF 20 661958 -2
ALLY 57 2517368 3
Average 34.3 1270875 -0.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 34.3 hedge funds with bullish positions and the average amount invested in these stocks was $1271 million. That figure was $773 million in TYL’s case. Ally Financial Inc (NYSE:ALLY) is the most popular stock in this table. On the other hand Ubiquiti Inc. (NYSE:UI) is the least popular one with only 20 bullish hedge fund positions. Tyler Technologies, Inc. (NYSE:TYL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TYL is 40.5. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. A small number of hedge funds were also right about betting on TYL as the stock returned 13.2% since the end of the third quarter (through 11/30) and outperformed the market by an even larger margin.

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