Is Synovus Financial Corp. (SNV) Right For Your Portfolio?

Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.

Synovus Financial Corp. (NYSE:SNV) shareholders have witnessed a decrease in hedge fund interest lately. SNV was in 21 hedge funds’ portfolios at the end of September. There were 22 hedge funds in our database with SNV 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 The Hanover Insurance Group, Inc. (NYSE:THG), SINA Corp (NASDAQ:SINA), and Medical Properties Trust, Inc. (NYSE:MPW) to gather more data points.

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.

violetkaipa/Shutterstock.com

How have hedgies been trading Synovus Financial Corp. (NYSE:SNV)?

At the end of the third quarter, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 5% dip from the previous quarter. Hedge fund ownership has remained in a fairly narrow range over the past year. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Israel Englander’s Millennium Management has the largest position in Synovus Financial Corp. (NYSE:SNV), worth close to $106 million. The second largest stake is held by Citadel Investment Group, led by Ken Griffin, holding a $73.6 million position. Some other hedge funds and institutional investors that hold long positions encompass Steven Richman’s East Side Capital (RR Partners), Richard S. Pzena’s Pzena Investment Management and Cliff Asness’ AQR Capital Management.

Due to the fact that Synovus Financial Corp. (NYSE:SNV) has witnessed declining sentiment from the smart money, we can see that there were a few funds that elected to cut their full holdings last quarter. Interestingly, Anton Schutz’s Mendon Capital Advisors dropped the largest investment of the 700 funds monitored by Insider Monkey, totaling about $9.4 million in stock. Paul Marshall and Ian Wace’s fund, Marshall Wace LLP, also dumped its stock, about $4.8 million worth. These transactions are important to note, as total hedge fund interest fell by 1 fund last quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Synovus Financial Corp. (NYSE:SNV) but similarly valued. We will take a look at The Hanover Insurance Group, Inc. (NYSE:THG), SINA Corp (NASDAQ:SINA), Medical Properties Trust, Inc. (NYSE:MPW), and Tribune Media Co (NYSE:TRCO). All of these stocks’ market caps are similar to SNV’s market cap.

As you can see these stocks had an average of 24.25 hedge funds with bullish positions and the average amount invested in these stocks was $610 million. That figure was $455 million in SNV’s case. SINA Corp (NASDAQ:SINA) is the most popular stock in this table. On the other hand The Hanover Insurance Group, Inc. (NYSE:THG) is the least popular one with only 16 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard SINA might be a better candidate to consider for a long position.

Disclosure: None