Synovus Financial Corp. (SNV) Fell Out Of Favor With Hedge Funds?

In this article we will take a look at whether hedge funds think Synovus Financial Corp. (NYSE:SNV) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Hedge fund interest in Synovus Financial Corp. (NYSE:SNV) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that SNV isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). At the end of this article we will also compare SNV to other stocks including Hanesbrands Inc. (NYSE:HBI), Planet Fitness Inc (NYSE:PLNT), and Twist Bioscience Corporation (NASDAQ:TWST) to get a better sense of its popularity.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Gavin Saitowitz of Prelude 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 review the key hedge fund action surrounding Synovus Financial Corp. (NYSE:SNV).

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

At the end of the second quarter, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the first quarter of 2020. On the other hand, there were a total of 27 hedge funds with a bullish position in SNV a year ago. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the largest position in Synovus Financial Corp. (NYSE:SNV). Citadel Investment Group has a $72.4 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Israel Englander of Millennium Management, with a $22.9 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other members of the smart money with similar optimism encompass Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, Mark Lee’s Forest Hill Capital and Cliff Asness’s AQR Capital 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 4.91% of its 13F portfolio. Private Capital Management is also relatively very bullish on the stock, designating 2 percent of its 13F equity portfolio to SNV.

Due to the fact that Synovus Financial Corp. (NYSE:SNV) has faced a decline in interest from the aggregate hedge fund industry, it’s easy to see that there were a few fund managers who sold off their positions entirely in the second quarter. Interestingly, Sander Gerber’s Hudson Bay Capital Management dumped the biggest stake of all the hedgies followed by Insider Monkey, comprising close to $9.8 million in stock, and Mark Kingdon’s Kingdon Capital was right behind this move, as the fund dropped about $6.9 million worth. These transactions are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now take a look at hedge fund activity in other stocks similar to Synovus Financial Corp. (NYSE:SNV). We will take a look at Hanesbrands Inc. (NYSE:HBI), Planet Fitness Inc (NYSE:PLNT), Twist Bioscience Corporation (NASDAQ:TWST), Performance Food Group Company (NYSE:PFGC), MSA Safety Incorporated (NYSE:MSA), Coherent, Inc. (NASDAQ:COHR), and Manpowergroup Inc (NYSE:MAN). All of these stocks’ market caps resemble SNV’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 30.6 hedge funds with bullish positions and the average amount invested in these stocks was $849 million. That figure was $232 million in SNV’s case. Coherent, Inc. (NASDAQ:COHR) is the most popular stock in this table. On the other hand MSA Safety Incorporated (NYSE:MSA) is the least popular one with only 13 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 55.3. 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 gained 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. A small number of hedge funds were also right about betting on SNV as the stock returned 4.8% since the end of the second quarter (through 10/15) and outperformed the market by an even larger margin.

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