In this article we will analyze whether Synovus Financial Corp. (NYSE:SNV) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Is SNV a good stock to buy? Synovus Financial Corp. (NYSE:SNV) was in 30 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 41. SNV investors should be aware of a decrease in hedge fund sentiment recently. There were 33 hedge funds in our database with SNV holdings at the end of December. Our calculations also showed that SNV isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Matthew Hulsizer of PEAK6 Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. 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 homepage. Now let’s analyze the new hedge fund action surrounding Synovus Financial Corp. (NYSE:SNV).
Do Hedge Funds Think SNV Is A Good Stock To Buy Now?
At first quarter’s end, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of -9% from one quarter earlier. By comparison, 33 hedge funds held shares or bullish call options in SNV a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
The largest stake in Synovus Financial Corp. (NYSE:SNV) was held by Citadel Investment Group, which reported holding $69.2 million worth of stock at the end of December. It was followed by Schonfeld Strategic Advisors with a $21.4 million position. Other investors bullish on the company included Carlson Capital, Forest Hill Capital, and Millennium Management. In terms of the portfolio weights assigned to each position Forest Hill Capital allocated the biggest weight to Synovus Financial Corp. (NYSE:SNV), around 5.15% of its 13F portfolio. Private Capital Management is also relatively very bullish on the stock, dishing out 2.36 percent of its 13F equity portfolio to SNV.
Because Synovus Financial Corp. (NYSE:SNV) has experienced bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there was a specific group of hedge funds who were dropping their entire stakes by the end of the first quarter. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dumped the biggest stake of the “upper crust” of funds followed by Insider Monkey, valued at about $18.4 million in stock. Renaissance Technologies, also sold off its stock, about $5.8 million worth. These transactions are important to note, as total hedge fund interest was cut by 3 funds by the end of the first quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Synovus Financial Corp. (NYSE:SNV) but similarly valued. These stocks are Dicks Sporting Goods Inc (NYSE:DKS), TG Therapeutics Inc (NASDAQ:TGTX), Apache Corporation (NYSE:APA), Pinnacle Financial Partners (NASDAQ:PNFP), Change Healthcare Inc. (NASDAQ:CHNG), Stifel Financial Corp. (NYSE:SF), and Planet Fitness Inc (NYSE:PLNT). This group of stocks’ market caps resemble SNV’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DKS | 31 | 852354 | -11 |
| TGTX | 27 | 859565 | -11 |
| APA | 42 | 497934 | 7 |
| PNFP | 14 | 70443 | 1 |
| CHNG | 56 | 1845472 | 11 |
| SF | 15 | 190899 | -3 |
| PLNT | 40 | 1181093 | -7 |
| Average | 32.1 | 785394 | -1.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.1 hedge funds with bullish positions and the average amount invested in these stocks was $785 million. That figure was $264 million in SNV’s case. Change Healthcare Inc. (NASDAQ:CHNG) is the most popular stock in this table. On the other hand Pinnacle Financial Partners (NASDAQ:PNFP) is the least popular one with only 14 bullish hedge fund positions. Synovus Financial Corp. (NYSE:SNV) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SNV is 43. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 22.8% in 2021 through July 2nd and surpassed the market again by 6 percentage points. Unfortunately SNV wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); SNV investors were disappointed as the stock returned -2.8% since the end of March (through 7/2) 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 in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
