Do Hedge Funds Love Synalloy Corporation (SYNL)?

Is Synalloy Corporation (NASDAQ:SYNL) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to find the latest market-moving information.

Synalloy Corporation (NASDAQ:SYNL) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 4 hedge funds’ portfolios at the end of the third quarter of 2015. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Sphere 3D Corp. (NASDAQ:ANY), Patriot Transportation Holding Inc (NASDAQ:PATI), and Southern Connecticut Bancorp Inc. (NYSEAMEX:SSE) to gather more data points.

If you’d ask most stock holders, hedge funds are viewed as slow, old investment vehicles of the past. While there are more than 8000 funds with their doors open today, Our researchers choose to focus on the leaders of this group, about 700 funds. These money managers watch over the majority of the hedge fund industry’s total asset base, and by monitoring their inimitable picks, Insider Monkey has determined numerous investment strategies that have historically outrun the market. Insider Monkey’s small-cap hedge fund strategy exceeded the S&P 500 index by 12 percentage points per year for a decade in their back tests.

With all of this in mind, we’re going to take a peek at the key action regarding Synalloy Corporation (NASDAQ:SYNL).

Hedge fund activity in Synalloy Corporation (NASDAQ:SYNL)

Heading into Q4, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Tom Gayner’s Markel Gayner Asset Management has the most valuable position in Synalloy Corporation (NASDAQ:SYNL), worth close to $7.1 million, amounting to 0.2% of its total 13F portfolio. Sitting at the No. 2 spot is Royce & Associates, managed by Chuck Royce, which holds a $5 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other professional money managers that hold long positions contain Thomas E. Lynch’s Mill Road Capital Management and Jim Simons’s Renaissance Technologies.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s now review hedge fund activity in other stocks similar to Synalloy Corporation (NASDAQ:SYNL). These stocks are Sphere 3D Corp. (NASDAQ:ANY), Patriot Transportation Holding Inc (NASDAQ:PATI), Southern Connecticut Bancorp Inc. (NYSEAMEX:SSE), and Willbros Group Inc (NYSE:WG). This group of stocks’ market values resemble SYNL’s market value.

As you can see these stocks had an average of seven hedge funds with bullish positions and the average amount invested in these stocks was $12 million, versus $14 million in SYNL’s case. Southern Connecticut Bancorp Inc. (NYSEAMEX:SSE) is the most popular stock in this table. On the other hand Sphere 3D Corp. (NASDAQ:ANY) is the least popular one with only four bullish hedge fund positions. Compared to these stocks, we can notice that hedge funds aren’t fond of Synalloy Corporation (NASDAQ:SYNL) in relation to other companies analyzed in this article. Therefore, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.