Syntel, Inc. (SYNT): Insiders Are Dumping, Should You?

Is Syntel, Inc. (NASDAQ:SYNT) a healthy stock for your portfolio? Hedge funds are taking a pessimistic view. The number of bullish hedge fund positions dropped by 1 lately.

According to most stock holders, hedge funds are perceived as worthless, outdated investment tools of the past. While there are more than 8000 funds trading at the moment, we at Insider Monkey look at the elite of this group, about 450 funds. It is widely believed that this group controls the majority of the smart money’s total asset base, and by keeping an eye on their best equity investments, we have figured out a few investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 24 percentage points in 7 months (explore the details and some picks here).

Equally as beneficial, bullish insider trading activity is another way to parse down the world of equities. There are many incentives for an executive to drop shares of his or her company, but only one, very clear reason why they would behave bullishly. Several empirical studies have demonstrated the impressive potential of this strategy if you understand where to look (learn more here).

Keeping this in mind, let’s take a glance at the key action encompassing Syntel, Inc. (NASDAQ:SYNT).

What have hedge funds been doing with Syntel, Inc. (NASDAQ:SYNT)?

At year’s end, a total of 8 of the hedge funds we track were long in this stock, a change of -11% from the third quarter. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were boosting their holdings considerably.

When looking at the hedgies we track, Renaissance Technologies, managed by Jim Simons, holds the largest position in Syntel, Inc. (NASDAQ:SYNT). Renaissance Technologies has a $21.2 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by Royce & Associates, managed by Chuck Royce, which held a $19 million position; 0.1% of its 13F portfolio is allocated to the company. Some other peers that are bullish include Israel Englander’s Millennium Management, Joel Greenblatt’s Gotham Asset Management and Mike Vranos’s Ellington.

Because Syntel, Inc. (NASDAQ:SYNT) has experienced declining sentiment from the smart money, logic holds that there is a sect of money managers who sold off their positions entirely last quarter. Interestingly, Richard Driehaus’s Driehaus Capital sold off the biggest position of the “upper crust” of funds we track, valued at an estimated $3.8 million in stock.. Ken Griffin’s fund, Citadel Investment Group, also dropped its stock, about $0.6 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds last quarter.

What have insiders been doing with Syntel, Inc. (NASDAQ:SYNT)?

Insider buying is best served when the company in question has seen transactions within the past 180 days. Over the last half-year time frame, Syntel, Inc. (NASDAQ:SYNT) has experienced zero unique insiders buying, and 6 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Syntel, Inc. (NASDAQ:SYNT). These stocks are Rackspace Hosting, Inc. (NYSE:RAX), Gartner Inc (NYSE:IT), Acxiom Corporation (NASDAQ:ACXM), ServiceNow Inc (NYSE:NOW), and NCR Corporation (NYSE:NCR). This group of stocks are in the information technology services industry and their market caps resemble SYNT’s market cap.

With the returns demonstrated by our research, everyday investors must always monitor hedge fund and insider trading activity, and Syntel, Inc. (NASDAQ:SYNT) is an important part of this process.

Click here to learn why you should track hedge funds