Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Agilysys, Inc. (NASDAQ:AGYS).
Is Agilysys, Inc. (NASDAQ:AGYS) a good investment now? The smart money is becoming less confident. The number of bullish hedge fund positions went down by 1 lately. Our calculations also showed that agys isn't among the 30 most popular stocks among hedge funds. AGYS was in 12 hedge funds' portfolios at the end of the third quarter of 2018. There were 13 hedge funds in our database with AGYS holdings at the end of the previous quarter.
To the average investor there are a lot of formulas stock market investors employ to evaluate publicly traded companies. A duo of the most useful formulas are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the best fund managers can outpace the S&P 500 by a significant amount (see the details here).
We're going to take a glance at the latest hedge fund action surrounding Agilysys, Inc. (NASDAQ:AGYS).
What have hedge funds been doing with Agilysys, Inc. (NASDAQ:AGYS)?
Heading into the fourth quarter of 2018, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in AGYS over the last 13 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
More specifically, MAK Capital One was the largest shareholder of Agilysys, Inc. (NASDAQ:AGYS), with a stake worth $86.1 million reported as of the end of September. Trailing MAK Capital One was Archon Capital Management, which amassed a stake valued at $19.5 million. Renaissance Technologies, ACK Asset Management, and Headlands Capital were also very fond of the stock, giving the stock large weights in their portfolios.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Springbok 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 none of the 700+ hedge funds tracked by Insider Monkey identified AGYS as a viable investment and initiated a position in the stock.
Let's go over hedge fund activity in other stocks similar to Agilysys, Inc. (NASDAQ:AGYS). These stocks are Braemar Hotels & Resorts Inc. (NYSE:BHR), Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD), West Bancorporation, Inc. (NASDAQ:WTBA), and Evelo Biosciences, Inc. (NASDAQ:EVLO). This group of stocks' market values are similar to AGYS's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BHR,12,85339,2 GLDD,9,35799,-1 WTBA,3,7936,0 EVLO,1,4959,-2 Average,6.25,33508,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.25 hedge funds with bullish positions and the average amount invested in these stocks was $34 million. That figure was $147 million in AGYS's case. Braemar Hotels & Resorts Inc. (NYSE:BHR) is the most popular stock in this table. On the other hand Evelo Biosciences, Inc. (NASDAQ:EVLO) is the least popular one with only 1 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. In this regard BHR might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.