Syntel, Inc. (SYNT): Are Hedge Funds Right About This Stock?

As we already know from media reports and hedge fund investor letters, many hedge funds lost money in the third quarter, blaming macroeconomic conditions and unpredictable events that hit several sectors, with healthcare among them. Nevertheless, most investors decided to stick to their bullish theses and their long-term focus allows us to profit from the recent declines. In particular, let’s take a look at what hedge funds think about Syntel, Inc. (NASDAQ:SYNT) in this article.

Syntel, Inc. (NASDAQ:SYNT) was in 17 hedge funds’ portfolios at the end of the third quarter of 2015. Syntel, Inc. (NASDAQ:SYNT) investors should be aware of an increase in activity from the world’s largest hedge funds of late. There were 10 hedge funds in our database with Syntel, Inc. (NASDAQ:SYNT) positions at the end of the previous quarter. At the end of this article, we will also compare Syntel, Inc. (NASDAQ:SYNT) to other stocks, including Bank Of The Ozarks Inc (NASDAQ:OZRK), Dun & Bradstreet Corp (NYSE:DNB), and LPL Financial Holdings Inc (NASDAQ:LPLA) to get a better sense of its popularity.

In the 21st century investor’s toolkit, there are a large number of formulas stock traders use to evaluate publicly traded companies. Some of the most under-the-radar formulas are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the top picks of the elite investment managers can beat the S&P 500 by a healthy amount (see the details here).

Keeping this in mind, we’re going to take a look at the new action surrounding Syntel, Inc. (NASDAQ:SYNT).

What does the smart money think about Syntel, Inc. (NASDAQ:SYNT)?

Heading into Q4, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 70% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies has the largest position in Syntel, Inc. (NASDAQ:SYNT), worth close to $32.3 million, accounting for 0.1% of its total 13F portfolio. The second largest stake is held by Lee Munder Capital Group, managed by Lee Munder, which holds a $10.9 million position; 0.2% of its 13F portfolio is allocated to the company. Some other members of the smart money with similar optimism include Martin Whitman’s Third Avenue Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Roger Ibbotson’s Zebra Capital Management.

As industrywide interest jumped, some big names were breaking ground themselves. Neil Chriss’ Hutchin Hill Capital made a $1.6 million investment in the stock during the quarter. The other funds with brand new Syntel, Inc. (NASDAQ:SYNT) positions are John Overdeck and David Siegel’s Two Sigma Advisors, Glenn Russell Dubin’s Highbridge Capital Management, and Mike Vranos’s Ellington.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Syntel, Inc. (NASDAQ:SYNT) but similarly valued. We will take a look at Bank Of The Ozarks Inc (NASDAQ:OZRK), Dun & Bradstreet Corp (NYSE:DNB), LPL Financial Holdings Inc (NASDAQ:LPLA), and Nordson Corporation (NASDAQ:NDSN). This group of stocks’ market valuations resembles Syntel, Inc. (NASDAQ:SYNT)’s market valuation.

As you can see, these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $433 million. That figure was $66 million in Syntel, Inc. (NASDAQ:SYNT)’s case. Dun & Bradstreet Corp (NYSE:DNB) is the most popular stock in this table. On the other hand, Bank Of The Ozarks Inc (NASDAQ:OZRK) is the least popular one with only 13 bullish hedge fund positions. Syntel, Inc. (NASDAQ:SYNT) 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, Dun & Bradstreet Corp (NYSE:DNB) might be a better candidate to consider a long position.