The fourth quarter was a rough one for most investors, as fears of a rising interest rate environment in the U.S, a trade war with China, and a more or less stagnant Europe, weighed heavily on the minds of investors. Both the S&P 500 and Russell 2000 sank as a result, with the Russell 2000, which is composed of smaller companies, being hit especially hard. This was primarily due to hedge funds, which are big supporters of small-cap stocks, pulling some of their capital out of the volatile markets during this time. Let’s look at how this market volatility affected the sentiment of hedge funds towards Synaptics Incorporated (NASDAQ:SYNA), and what that likely means for the prospects of the company and its stock.
Is Synaptics Incorporated (NASDAQ:SYNA) the right investment to pursue these days? Hedge funds are in a bullish mood. The number of long hedge fund positions rose by 1 recently. Our calculations also showed that syna isn’t among the 30 most popular stocks among hedge funds. SYNA was in 17 hedge funds’ portfolios at the end of September. There were 16 hedge funds in our database with SYNA positions at the end of the previous quarter.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to view the recent hedge fund action surrounding Synaptics Incorporated (NASDAQ:SYNA).
How are hedge funds trading Synaptics Incorporated (NASDAQ:SYNA)?
Heading into the fourth quarter of 2018, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the second quarter of 2018. By comparison, 17 hedge funds held shares or bullish call options in SYNA heading into this year. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Citadel Investment Group held the most valuable stake in Synaptics Incorporated (NASDAQ:SYNA), which was worth $51.1 million at the end of the third quarter. On the second spot was Fisher Asset Management which amassed $42.9 million worth of shares. Moreover, Royce & Associates, Millennium Management, and Two Sigma Advisors were also bullish on Synaptics Incorporated (NASDAQ:SYNA), allocating a large percentage of their portfolios to this stock.
Now, key money managers were breaking ground themselves. VIEX Capital Advisors, managed by Eric Singer, established the largest position in Synaptics Incorporated (NASDAQ:SYNA). VIEX Capital Advisors had $10.1 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also made a $0.4 million investment in the stock during the quarter. The only other fund with a new position in the stock is Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Synaptics Incorporated (NASDAQ:SYNA) but similarly valued. These stocks are Usa Compression Partners LP (NYSE:USAC), Archrock, Inc. (NYSE:AROC), ForeScout Technologies, Inc. (NASDAQ:FSCT), and iShares PHLX Semiconductor ETF (NASDAQ:SOXX). This group of stocks’ market values match SYNA’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| USAC | 5 | 18025 | -1 |
| AROC | 15 | 29597 | -1 |
| FSCT | 16 | 183943 | 4 |
| SOXX | 2 | 4285 | -2 |
| Average | 9.5 | 58963 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.5 hedge funds with bullish positions and the average amount invested in these stocks was $59 million. That figure was $190 million in SYNA’s case. ForeScout Technologies, Inc. (NASDAQ:FSCT) is the most popular stock in this table. On the other hand iShares PHLX Semiconductor ETF (NASDAQ:SOXX) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Synaptics Incorporated (NASDAQ:SYNA) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None. This article was originally published at Insider Monkey.
