Should I Avoid Syndax Pharmaceuticals, Inc. (SNDX)?

Last year we predicted the arrival of the first US recession since 2009 and we told in advance 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 Syndax Pharmaceuticals, Inc. (NASDAQ:SNDX).

Syndax Pharmaceuticals, Inc. (NASDAQ:SNDX) was in 25 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 37. SNDX investors should pay attention to a decrease in hedge fund interest in recent months. There were 33 hedge funds in our database with SNDX holdings at the end of March. Our calculations also showed that SNDX isn’t among the 30 most popular stocks among hedge funds (click for Q2 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 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Phillip Gross of Adage 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 take a gander at the latest hedge fund action encompassing Syndax Pharmaceuticals, Inc. (NASDAQ:SNDX).

Do Hedge Funds Think SNDX Is A Good Stock To Buy Now?

At the end of June, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of -24% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in SNDX over the last 24 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Avoro Capital Advisors (venBio Select Advisor) held the most valuable stake in Syndax Pharmaceuticals, Inc. (NASDAQ:SNDX), which was worth $51.5 million at the end of the second quarter. On the second spot was Nantahala Capital Management which amassed $44.5 million worth of shares. Adage Capital Management, Biotechnology Value Fund / BVF Inc, and Partner Fund Management were 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 Ghost Tree Capital allocated the biggest weight to Syndax Pharmaceuticals, Inc. (NASDAQ:SNDX), around 4.13% of its 13F portfolio. Frazier Healthcare Partners is also relatively very bullish on the stock, designating 1.88 percent of its 13F equity portfolio to SNDX.

Since Syndax Pharmaceuticals, Inc. (NASDAQ:SNDX) has experienced a decline in interest from the entirety of the hedge funds we track, logic holds that there exists a select few fund managers that slashed their entire stakes by the end of the second quarter. Intriguingly, Peter Kolchinsky’s RA Capital Management dropped the biggest position of the 750 funds followed by Insider Monkey, worth an estimated $22.9 million in stock. Joseph Edelman’s fund, Perceptive Advisors, also cut its stock, about $6 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 8 funds by the end of the second quarter.

Let’s check out hedge fund activity in other stocks similar to Syndax Pharmaceuticals, Inc. (NASDAQ:SNDX). We will take a look at Vinci Partners Investments Ltd. (NASDAQ:VINP), Home Point Capital Inc. (NASDAQ:HMPT), Wabash National Corporation (NYSE:WNC), ACCO Brands Corporation (NYSE:ACCO), Gladstone Commercial Corporation (NASDAQ:GOOD), PAE Incorporated (NASDAQ:PAE), and Echo Global Logistics, Inc. (NASDAQ:ECHO). This group of stocks’ market valuations resemble SNDX’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.6 hedge funds with bullish positions and the average amount invested in these stocks was $54 million. That figure was $415 million in SNDX’s case. ACCO Brands Corporation (NYSE:ACCO) is the most popular stock in this table. On the other hand Gladstone Commercial Corporation (NASDAQ:GOOD) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Syndax Pharmaceuticals, Inc. (NASDAQ:SNDX) is more popular among hedge funds. Our overall hedge fund sentiment score for SNDX is 67.3. 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 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 returned 24% in 2021 through October 22nd but still managed to beat the market by 1.6 percentage points. Hedge funds were also right about betting on SNDX as the stock returned 10.4% since the end of June (through 10/22) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

Suggested Articles:

• 10 Small-Cap Stocks With Huge Growth Potential
• Top Stocks to Invest In According to Jeffrey Ubben’s ValueAct Capital
• 10 Best Value Stocks to Buy for 2021

Disclosure: None. This article was originally published at Insider Monkey.