Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those successful funds in these small-cap stocks. In the following paragraphs, we analyze Syntel, Inc. (NASDAQ:SYNT) from the perspective of those successful funds.
Syntel, Inc. (NASDAQ:SYNT) investors should pay attention to a decrease in hedge fund sentiment in recent months. There were 15 hedge funds in our database with SYNT positions at the end of the third quarter. At the end of this article we will also compare SYNT to other stocks including Compania de Minas Buenaventura SA (ADR) (NYSE:BVN), Shopify Inc (NYSE:SHOP), and AU Optronics Corp. (ADR) (NYSE:AUO) to get a better sense of its popularity.
Follow Syntel Inc (NASDAQ:SYNT)
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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Hedge fund activity in Syntel, Inc. (NASDAQ:SYNT)
At Q3’s end, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, down by 17% from one quarter earlier. By comparison, 15 hedge funds held shares or bullish call options in SYNT heading into this year. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, one of the 10 biggest hedge funds in the world, has the largest position in Syntel, Inc. (NASDAQ:SYNT), worth close to $28.5 million. Coming in second is Ernest Chow and Jonathan Howe of Sensato Capital Management, with a $8.2 million position; the fund has 1.8% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish include Martin Whitman’s Third Avenue Management, Roger Ibbotson’s Zebra Capital Management and Cliff Asness’ AQR Capital Management. We should note that Sensato Capital Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Because Syntel, Inc. (NASDAQ:SYNT) has weathered declining sentiment from the entirety of the hedge funds we track, we can see that there is a sect of hedge funds that decided to sell off their full holdings heading into Q4. At the top of the heap, Anand Parekh’s Alyeska Investment Group sold off the biggest investment of all the investors studied by Insider Monkey, valued at close to $10.9 million in stock, and Peter Muller’s PDT Partners was right behind this move, as the fund sold off about $1.2 million worth of shares.
Let’s now take a look at hedge fund activity in other stocks similar to Syntel, Inc. (NASDAQ:SYNT). These stocks are Compania de Minas Buenaventura SA (ADR) (NYSE:BVN), Shopify Inc (NYSE:SHOP), AU Optronics Corp. (ADR) (NYSE:AUO), and First Citizens BancShares Inc. (NASDAQ:FCNCA). This group of stocks’ market valuations are similar to SYNT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BVN | 8 | 45074 | -2 |
| SHOP | 31 | 450154 | 7 |
| AUO | 10 | 56987 | -5 |
| FCNCA | 11 | 141274 | 0 |
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $173 million. That figure was $54 million in SYNT’s case. Shopify Inc (NYSE:SHOP) is the most popular stock in this table. On the other hand Compania de Minas Buenaventura SA (ADR) (NYSE:BVN) is the least popular one with only 8 bullish hedge fund positions. Syntel, Inc. (NASDAQ:SYNT) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard SHOP might be a better candidate to consider taking a long position in.
Disclosure: None
