It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 5.2% over the 12-month period ending October 30th, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored S&P 500 stocks by the hedge funds monitored by Insider Monkey (as of September 2014) generated a return of 9.5% over the same time span, with 63% of these stocks outperforming the benchmark. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Synergy Resources Corp (NYSEAMEX:SYRG).
Synergy Resources Corp (NYSEAMEX:SYRG) has experienced a decrease in support from the world’s most elite money managers lately. SYRG was in 13 hedge funds’ portfolios at the end of September. There were 17 hedge funds in our database with SYRG holdings at the end of the previous quarter. 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 Quaker Chemical Corp (NYSE:KWR), Petrobras Argentina SA ADR (NYSE:PZE), and Bottomline Technologies (NASDAQ:EPAY) to gather more data points.
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To the average investor, there are a multitude of gauges market participants can use to size up publicly traded companies. A duo of the best gauges are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the best investment managers can outclass the broader indices by a very impressive amount (see the details here).
Keeping this in mind, we’re going to check out the latest action encompassing Synergy Resources Corp (NYSEAMEX:SYRG).
What does the smart money think about Synergy Resources Corp (NYSEAMEX:SYRG)?
At Q3’s end, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of -24% from the previous quarter. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the largest position in Synergy Resources Corp (NYSEAMEX:SYRG). Citadel Investment Group has a $19.7 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is David Zusman of Talara Capital Management, with a $8.8 million position; 5.5% of its 13F portfolio is allocated to the stock. The remaining members of the smart money with similar optimism consist of Chuck Royce’s Royce & Associates, Vince Maddi and Shawn Brennan’s SIR Capital Management and Steve Cohen’s Point72 Asset Management.
Since Synergy Resources Corp (NYSEAMEX:SYRG) has experienced falling interest from hedge fund managers, it’s easy to see that there were a few money managers that decided to sell off their positions entirely last quarter. Interestingly, Drew Cupps’s Cupps Capital Management cut the biggest stake of the 700 funds watched by Insider Monkey, totaling close to $4.2 million in stock. Douglas T. Granat’s fund, Trigran Investments, also said goodbye to its stock, about $2.2 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 4 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Synergy Resources Corp (NYSEAMEX:SYRG). We will take a look at Quaker Chemical Corp (NYSE:KWR), Petrobras Argentina SA ADR (NYSE:PZE), Bottomline Technologies (NASDAQ:EPAY), and Aerojet Rocketdyne Holdings Inc (NYSE:AJRD). This group of stocks’ market valuations are similar to SYRG’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KWR | 12 | 102188 | 3 |
| PZE | 9 | 26610 | -1 |
| EPAY | 7 | 21592 | -6 |
| AJRD | 27 | 320100 | 10 |
As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $118 million, compared to $54 million in SYRG’s case. Aerojet Rocketdyne Holdings Inc (NYSE:AJRD) is the most popular stock in this table. On the other hand Bottomline Technologies (NASDAQ:EPAY) is the least popular one with only seven funds holding shares. Even though Synergy Resources Corp (NYSEAMEX:SYRG) is not the least popular stock in this group, it has a below-average hedge fund interest. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard AJRD might be a better candidate to consider a long position.
