In this article we are going to use hedge fund sentiment as a tool and determine whether GTY Technology Holdings, Inc. (NASDAQ:GTYH) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Is GTY Technology Holdings, Inc. (NASDAQ:GTYH) a marvelous investment now? Prominent investors were taking a bullish view. The number of bullish hedge fund positions increased by 2 in recent months. GTY Technology Holdings, Inc. (NASDAQ:GTYH) was in 6 hedge funds’ portfolios at the end of September. The all time high for this statistics is 21. Our calculations also showed that GTYH isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 4 hedge funds in our database with GTYH positions at the end of the second quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
According to most shareholders, hedge funds are assumed to be underperforming, old investment vehicles of the past. While there are over 8000 funds in operation at the moment, Our researchers hone in on the elite of this club, approximately 850 funds. Most estimates calculate that this group of people handle the majority of the hedge fund industry’s total capital, and by paying attention to their unrivaled stock picks, Insider Monkey has unsheathed several investment strategies that have historically beaten Mr. Market. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 let’s take a gander at the latest hedge fund action surrounding GTY Technology Holdings, Inc. (NASDAQ:GTYH).
What have hedge funds been doing with GTY Technology Holdings, Inc. (NASDAQ:GTYH)?
At the end of September, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 50% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in GTYH over the last 21 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Miller Value Partners was the largest shareholder of GTY Technology Holdings, Inc. (NASDAQ:GTYH), with a stake worth $5.1 million reported as of the end of September. Trailing Miller Value Partners was Kingdon Capital, which amassed a stake valued at $3.1 million. GAMCO Investors, Levin Capital Strategies, and Millennium 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 Kingdon Capital allocated the biggest weight to GTY Technology Holdings, Inc. (NASDAQ:GTYH), around 0.35% of its 13F portfolio. Miller Value Partners is also relatively very bullish on the stock, designating 0.18 percent of its 13F equity portfolio to GTYH.
With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Millennium Management, managed by Israel Englander, initiated the most outsized position in GTY Technology Holdings, Inc. (NASDAQ:GTYH). Millennium Management had $0.1 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also initiated a $0 million position during the quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as GTY Technology Holdings, Inc. (NASDAQ:GTYH) but similarly valued. We will take a look at AudioEye, Inc. (NASDAQ:AEYE), Parke Bancorp, Inc. (NASDAQ:PKBK), Golar LNG Partners LP (NASDAQ:GMLP), Servicesource International Inc (NASDAQ:SREV), Lineage Cell Therapeutics, Inc. (NYSE:LCTX), Educational Development Corporation (NASDAQ:EDUC), and Equillium, Inc. (NASDAQ:EQ). This group of stocks’ market valuations resemble GTYH’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 5.9 hedge funds with bullish positions and the average amount invested in these stocks was $16 million. That figure was $9 million in GTYH’s case. Servicesource International Inc (NASDAQ:SREV) is the most popular stock in this table. On the other hand Parke Bancorp, Inc. (NASDAQ:PKBK) is the least popular one with only 3 bullish hedge fund positions. GTY Technology Holdings, Inc. (NASDAQ:GTYH) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GTYH is 40.6. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. Hedge funds were also right about betting on GTYH as the stock returned 46.8% since the end of Q3 (through 11/27) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.