Hedge Funds Are Crazy About Syndax Pharmaceuticals, Inc. (SNDX)

Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Syndax Pharmaceuticals, Inc. (NASDAQ:SNDX).

Syndax Pharmaceuticals, Inc. (NASDAQ:SNDX) has experienced an increase in support from the world’s most elite money managers of late. Syndax Pharmaceuticals, Inc. (NASDAQ:SNDX) was in 28 hedge funds’ portfolios at the end of September. The all time high for this statistic is 37. There were 25 hedge funds in our database with SNDX holdings at the end of June. Our calculations also showed that SNDX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we’re going to take a gander at the recent hedge fund action surrounding Syndax Pharmaceuticals, Inc. (NASDAQ:SNDX).

Phillip Gross of Adage Capital

Do Hedge Funds Think SNDX Is A Good Stock To Buy Now?

At the end of September, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 12% from the previous quarter. On the other hand, there were a total of 25 hedge funds with a bullish position in SNDX a year ago. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Adage Capital Management, managed by Phill Gross and Robert Atchinson, holds the largest position in Syndax Pharmaceuticals, Inc. (NASDAQ:SNDX). Adage Capital Management has a $54.8 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by Nantahala Capital Management, led by Wilmot B. Harkey and Daniel Mack, holding a $50.8 million position; 1.6% of its 13F portfolio is allocated to the company. Some other members of the smart money that are bullish encompass Mark Lampert’s Biotechnology Value Fund / BVF Inc, Christopher James’s Partner Fund Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Ghost Tree Capital allocated the biggest weight to Syndax Pharmaceuticals, Inc. (NASDAQ:SNDX), around 3.21% of its 13F portfolio. Biotechnology Value Fund / BVF Inc is also relatively very bullish on the stock, setting aside 1.85 percent of its 13F equity portfolio to SNDX.

Consequently, specific money managers have been driving this bullishness. OrbiMed Advisors, established the most outsized position in Syndax Pharmaceuticals, Inc. (NASDAQ:SNDX). OrbiMed Advisors had $3.6 million invested in the company at the end of the quarter. Julian Baker and Felix Baker’s Baker Bros. Advisors also initiated a $2.1 million position during the quarter. The following funds were also among the new SNDX investors: Paul Marshall and Ian Wace’s Marshall Wace LLP, Matthew L Pinz’s Pinz Capital, and Jose Fernandez’s Stepstone Group.

Let’s now take a look at hedge fund activity in other stocks similar to Syndax Pharmaceuticals, Inc. (NASDAQ:SNDX). We will take a look at Amerant Bancorp Inc. (NASDAQ:AMTB), Byline Bancorp, Inc. (NYSE:BY), Weber Inc. (NYSE:WEBR), International Seaways, Inc. (NYSE:INSW), Keros Therapeutics, Inc. (NASDAQ:KROS), Forestar Group Inc. (NYSE:FOR), and Prometheus Biosciences, Inc. (NASDAQ:RXDX). This group of stocks’ market valuations are similar to SNDX’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.1 hedge funds with bullish positions and the average amount invested in these stocks was $113 million. That figure was $432 million in SNDX’s case. Keros Therapeutics, Inc. (NASDAQ:KROS) is the most popular stock in this table. On the other hand Weber Inc. (NYSE:WEBR) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Syndax Pharmaceuticals, Inc. (NASDAQ:SNDX) is more popular among hedge funds. Our overall hedge fund sentiment score for SNDX is 80.7. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 31.1% in 2021 through December 9th and still beat the market by 5.1 percentage points. Unfortunately SNDX wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on SNDX were disappointed as the stock returned -8.5% since the end of the third quarter (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.