How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Synaptics Incorporated (NASDAQ:SYNA).
Is Synaptics Incorporated (NASDAQ:SYNA) a sound investment now? Prominent investors were becoming more confident. The number of long hedge fund positions advanced by 2 recently. Synaptics Incorporated (NASDAQ:SYNA) was in 27 hedge funds’ portfolios at the end of June. The all time high for this statistic is 28. Our calculations also showed that SYNA isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely 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. With all of this in mind let’s analyze the latest hedge fund action regarding Synaptics Incorporated (NASDAQ:SYNA).
Do Hedge Funds Think SYNA Is A Good Stock To Buy Now?
At the end of June, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SYNA over the last 24 quarters. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
The largest stake in Synaptics Incorporated (NASDAQ:SYNA) was held by Fisher Asset Management, which reported holding $174.9 million worth of stock at the end of June. It was followed by Trigran Investments with a $64.1 million position. Other investors bullish on the company included Greenhouse Funds, D E Shaw, and Renaissance Technologies. In terms of the portfolio weights assigned to each position Trigran Investments allocated the biggest weight to Synaptics Incorporated (NASDAQ:SYNA), around 7.06% of its 13F portfolio. Greenhouse Funds is also relatively very bullish on the stock, dishing out 5.4 percent of its 13F equity portfolio to SYNA.
As aggregate interest increased, key hedge funds were leading the bulls’ herd. LMR Partners, managed by Ben Levine, Andrew Manuel and Stefan Renold, created the largest position in Synaptics Incorporated (NASDAQ:SYNA). LMR Partners had $26.7 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also made a $4.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management, Mika Toikka’s AlphaCrest Capital Management, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Synaptics Incorporated (NASDAQ:SYNA) but similarly valued. These stocks are Teradata Corporation (NYSE:TDC), Bank OZK (NASDAQ:OZK), Cousins Properties Incorporated (NYSE:CUZ), Quidel Corporation (NASDAQ:QDEL), Valley National Bancorp (NYSE:VLY), Avis Budget Group Inc. (NASDAQ:CAR), and Open Lending Corporation (NASDAQ:LPRO). This group of stocks’ market caps match SYNA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TDC | 26 | 504981 | 0 |
| OZK | 19 | 256386 | -6 |
| CUZ | 17 | 156078 | 1 |
| QDEL | 19 | 219103 | -9 |
| VLY | 13 | 90860 | -4 |
| CAR | 27 | 1709974 | 6 |
| LPRO | 24 | 433663 | -9 |
| Average | 20.7 | 481578 | -3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.7 hedge funds with bullish positions and the average amount invested in these stocks was $482 million. That figure was $552 million in SYNA’s case. Avis Budget Group Inc. (NASDAQ:CAR) is the most popular stock in this table. On the other hand Valley National Bancorp (NYSE:VLY) is the least popular one with only 13 bullish hedge fund positions. Synaptics Incorporated (NASDAQ:SYNA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SYNA is 85.9. 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 gained 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Hedge funds were also right about betting on SYNA as the stock returned 11.5% since the end of Q2 (through 10/15) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
