At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards SCYNEXIS Inc (NASDAQ:SCYX).
SCYNEXIS Inc (NASDAQ:SCYX) was in 3 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 12. SCYX has experienced a decrease in support from the world’s most elite money managers lately. There were 7 hedge funds in our database with SCYX positions at the end of the second quarter. Our calculations also showed that SCYX 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).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
David Siegel of Two Sigma Advisors
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 10 most profitable companies in the world 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. With all of this in mind we’re going to take a gander at the latest hedge fund action surrounding SCYNEXIS Inc (NASDAQ:SCYX).
How are hedge funds trading SCYNEXIS Inc (NASDAQ:SCYX)?
At the end of the third quarter, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of -57% from one quarter earlier. By comparison, 6 hedge funds held shares or bullish call options in SCYX a year ago. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
More specifically, Puissance Capital Managementá was the largest shareholder of SCYNEXIS Inc (NASDAQ:SCYX), with a stake worth $1.4 million reported as of the end of September. Trailing Puissance Capital Managementá was Kingdon Capital, which amassed a stake valued at $1.2 million. Renaissance Technologies was 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 Puissance Capital Managementá allocated the biggest weight to SCYNEXIS Inc (NASDAQ:SCYX), around 7.91% of its 13F portfolio. Kingdon Capital is also relatively very bullish on the stock, dishing out 0.13 percent of its 13F equity portfolio to SCYX.
Since SCYNEXIS Inc (NASDAQ:SCYX) has witnessed declining sentiment from the aggregate hedge fund industry, it’s safe to say that there is a sect of fund managers that elected to cut their positions entirely heading into Q4. Intriguingly, Thomas Bailard’s Bailard Inc said goodbye to the biggest investment of the 750 funds watched by Insider Monkey, totaling close to $0 million in stock, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund cut about $0 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 4 funds heading into Q4.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as SCYNEXIS Inc (NASDAQ:SCYX) but similarly valued. These stocks are TESSCO Technologies, Inc. (NASDAQ:TESS), SEACOR Marine Holdings Inc. (NYSE:SMHI), RealNetworks Inc (NASDAQ:RNWK), SRAX, Inc. (NASDAQ:SRAX), The LGL Group, Inc. (NYSE:LGL), CBM Bancorp, Inc. (NASDAQ:CBMB), and MIND C.T.I. Ltd. (NASDAQ:MNDO). This group of stocks’ market caps are closest to SCYX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TESS | 3 | 3818 | -4 |
| SMHI | 2 | 1341 | -2 |
| RNWK | 4 | 6790 | -1 |
| SRAX | 2 | 159 | 1 |
| LGL | 4 | 7816 | -1 |
| CBMB | 3 | 1015 | 0 |
| MNDO | 1 | 152 | 0 |
| Average | 2.7 | 3013 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.7 hedge funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $3 million in SCYX’s case. RealNetworks Inc (NASDAQ:RNWK) is the most popular stock in this table. On the other hand MIND C.T.I. Ltd. (NASDAQ:MNDO) is the least popular one with only 1 bullish hedge fund positions. SCYNEXIS Inc (NASDAQ:SCYX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SCYX is 41.8. 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 28.1% in 2020 through November 23rd and still beat the market by 15.4 percentage points. Hedge funds were also right about betting on SCYX as the stock returned 35.1% since the end of Q3 (through 11/23) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Scynexis Inc (NASDAQ:SCYX)
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Disclosure: None. This article was originally published at Insider Monkey.
