Brown Capital Management, an investment management company, released its “The Brown Capital Management Mid Company Fund” fourth quarter 2022 investor letter. A copy of the same can be downloaded here. The Mid Company Fund returned 5.43% in the quarter compared to a 6.90% return for the Russell Midcap Growth Index. For the full year, the fund declined 37.12% compared to a -26.72% return for the benchmark. In addition, check the fund’s top five holdings to know its best picks in 2022.
The Brown Capital Management Mid Company Fund highlighted stocks like Tyler Technologies, Inc. (NYSE:TYL) in the Q4 2022 investor letter. Headquartered in Plano, Texas, Tyler Technologies, Inc. (NYSE:TYL) is a software solutions and services provider for the public sector. On March 17, 2023, Tyler Technologies, Inc. (NYSE:TYL) stock closed at $326.61 per share. One-month return of Tyler Technologies, Inc. (NYSE:TYL) was -4.94%, and its shares lost 25.01% of their value over the last 52 weeks. Tyler Technologies, Inc. (NYSE:TYL) has a market capitalization of $13.659 billion.
The Brown Capital Management Mid Company Fund made the following comment about Tyler Technologies, Inc. (NYSE:TYL) in its Q4 2022 investor letter:
“Tyler Technologies, Inc. (NYSE:TYL) is a leading provider of end-to-end software for state and local governments and public-sector entities, helping increase the efficiency of a wide variety of activities, from hearing court cases to paying tax bills to issuing drivers licenses. Tyler plays in a large market that is modestly penetrated with significant opportunity going forward. The company has a long runway of growth in an end market with antiquated technology and a need to digitalize. Tyler focuses primarily on state and local governments with geographic and national scale and a product suite with end-to-end offerings. These serve as high barriers to entry as opposed to competitors who primarily compete only in geographic regions or with a point solution. Tyler has the ability to expand its Total Addressable Market and its software rarely gets replaced, hence the 98%-plus retention rates.
Tyler’s share price underperformed in the quarter partly due to the challenging macro environment for Software-as-a-Service (SaaS) companies. The company’s transition to a subscription model from a license model, which in better times may have been viewed more bullishly, also dragged down margins and revenue growth. Rising rates also put pressure on deferred free cash flow stocks such as Tyler. Nonetheless, we believe margins should trough in 2023 with subscription revenue growth accelerating in the second half.”
Photo by Danial Igdery on Unsplash
Tyler Technologies, Inc. (NYSE:TYL) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 40 hedge fund portfolios held Tyler Technologies, Inc. (NYSE:TYL) at the end of the fourth quarter which was 41 in the previous quarter.
We discussed Tyler Technologies, Inc. (NYSE:TYL) in another article and shared Motley Fool’s high growth stock picks. In addition, please check out our hedge fund investor letters Q4 2022 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
