The Insider Monkey team has completed processing the quarterly 13F filings for the December 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 TYL stock a buy? Hedge funds were getting more bullish. The number of long hedge fund positions advanced by 1 lately. Tyler Technologies, Inc. (NYSE:TYL) was in 32 hedge funds’ portfolios at the end of the fourth quarter of 2020. 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 Q4 rankings).
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 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 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.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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. Keeping this in mind we’re going to take a peek at the fresh hedge fund action encompassing Tyler Technologies, Inc. (NYSE:TYL).
Do Hedge Funds Think TYL Is A Good Stock To Buy Now?
At fourth quarter’s end, a total of 32 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 3% from the previous quarter. By comparison, 21 hedge funds held shares or bullish call options in TYL a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
Among these funds, Skye Global Management held the most valuable stake in Tyler Technologies, Inc. (NYSE:TYL), which was worth $134.4 million at the end of the fourth quarter. On the second spot was Praesidium Investment Management Company which amassed $119.1 million worth of shares. Echo Street Capital Management, RGM Capital, and Bares Capital Management 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 Praesidium Investment Management Company allocated the biggest weight to Tyler Technologies, Inc. (NYSE:TYL), around 6.13% of its 13F portfolio. Precept Capital Management is also relatively very bullish on the stock, dishing out 5.31 percent of its 13F equity portfolio to TYL.
With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Montanaro Asset Management, managed by Charles Montanaro, assembled the largest position in Tyler Technologies, Inc. (NYSE:TYL). Montanaro Asset Management had $8.3 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $4.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Jinghua Yan’s TwinBeech Capital, Paul Tudor Jones’s Tudor Investment Corp, and Ken Griffin’s Citadel Investment Group.
Let’s check out hedge fund activity in other stocks similar to Tyler Technologies, Inc. (NYSE:TYL). These stocks are Hartford Financial Services Group Inc (NYSE:HIG), NICE Ltd (NASDAQ:NICE), GDS Holdings Limited (NASDAQ:GDS), Ubiquiti Inc. (NYSE:UI), CMS Energy Corporation (NYSE:CMS), China Unicom (Hong Kong) Limited (NYSE:CHU), and CNH Industrial NV (NYSE:CNHI). This group of stocks’ market valuations are closest to TYL’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.7 hedge funds with bullish positions and the average amount invested in these stocks was $935 million. That figure was $593 million in TYL’s case. GDS Holdings Limited (NASDAQ:GDS) is the most popular stock in this table. On the other hand China Unicom (Hong Kong) Limited (NYSE:CHU) is the least popular one with only 6 bullish hedge fund positions. Tyler Technologies, Inc. (NYSE:TYL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TYL is 72.1. 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. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th and beat the market again by 1.5 percentage points. Unfortunately TYL wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on TYL were disappointed as the stock returned 0.1% since the end of December (through 4/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.