Should You Buy Synchronoss Technologies, Inc. (SNCR)?

It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 7.6% in the 12 month-period that ended November 21, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular mid-cap stocks among the top hedge fund investors tracked by the Insider Monkey team returned 18% over the same period, which provides evidence that these money managers do have great stock picking abilities. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Synchronoss Technologies, Inc. (NASDAQ:SNCR).

Synchronoss Technologies, Inc. (NASDAQ:SNCR) investors should pay attention to an increase in enthusiasm from smart money in recent months. SNCR was in 18 hedge funds’ portfolios at the end of September. There were 16 hedge funds in our database with SNCR 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 Dolan Company (NYSE:DM), Haemonetics Corporation (NYSE:HAE), and Commercial Metals Company (NYSE:CMC) 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.

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What does the smart money think about Synchronoss Technologies, Inc. (NASDAQ:SNCR)?

At Q3’s end, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a gain of 13% from one quarter earlier. By comparison, 11 hedge funds held shares or bullish call options in SNCR heading into this year. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital has the number one position in Synchronoss Technologies, Inc. (NASDAQ:SNCR), worth close to $10.9 million. Coming in second is D E Shaw, one of the largest hedge funds in the world, with a $7.1 million position. Some other hedge funds and institutional investors that hold long positions comprise Gregg Moskowitz’s Interval Partners, Peter A. Wright’s P.A.W. CAPITAL PARTNERS and Nick Niell’s Arrowgrass Capital Partners. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

As industrywide interest jumped, some big names have jumped into Synchronoss Technologies, Inc. (NASDAQ:SNCR) headfirst. Interval Partners also initiated a $5.2 million position during the quarter. The other funds with brand new SNCR positions are Ken Griffin’s Citadel Investment Group and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s go over hedge fund activity in other stocks similar to Synchronoss Technologies, Inc. (NASDAQ:SNCR). We will take a look at The Dolan Company (NYSE:DM), Haemonetics Corporation (NYSE:HAE), Commercial Metals Company (NYSE:CMC), and KLX Inc (NASDAQ:KLXI). This group of stocks’ market caps match SNCR’s market cap.

As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $172 million. That figure was $42 million in SNCR’s case. KLX Inc (NASDAQ:KLXI) is the most popular stock in this table. On the other hand The Dolan Company (NYSE:DM) is the least popular one with only 4 bullish hedge fund positions. Synchronoss Technologies, Inc. (NASDAQ:SNCR) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard KLXI might be a better candidate to consider taking a long position in.

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Disclosure: None