Is Synacor (SYNC) A Good Stock To Buy Now?
Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don't make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Synacor Inc (NASDAQ:SYNC) to find out whether there were any major changes in hedge funds' views.
Is Synacor (SYNC) a good stock to buy now? Money managers were taking a bullish view. The number of bullish hedge fund bets inched up by 1 recently. Synacor Inc (NASDAQ:SYNC) was in 6 hedge funds' portfolios at the end of September. The all time high for this statistics is 7. Our calculations also showed that SYNC isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
John Rogers of Ariel Investments
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Keeping this in mind we're going to take a gander at the recent hedge fund action regarding Synacor Inc (NASDAQ:SYNC).
How have hedgies been trading Synacor Inc (NASDAQ:SYNC)?
At third quarter's end, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 20% from one quarter earlier. By comparison, 6 hedge funds held shares or bullish call options in SYNC a year ago. With the smart money's sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Renaissance Technologies has the number one position in Synacor Inc (NASDAQ:SYNC), worth close to $3 million, comprising less than 0.1%% of its total 13F portfolio. Coming in second is Fondren Management, managed by Bradley Louis Radoff, which holds a $1.8 million position; 10.8% of its 13F portfolio is allocated to the stock. Some other professional money managers with similar optimism consist of John W. Rogers's Ariel Investments, Frederick DiSanto's Ancora Advisors and Peter Algert's Algert Global. In terms of the portfolio weights assigned to each position Fondren Management allocated the biggest weight to Synacor Inc (NASDAQ:SYNC), around 10.82% of its 13F portfolio. Ancora Advisors is also relatively very bullish on the stock, earmarking 0.03 percent of its 13F equity portfolio to SYNC.
Now, key money managers have jumped into Synacor Inc (NASDAQ:SYNC) headfirst. Algert Global, managed by Peter Algert, established the largest position in Synacor Inc (NASDAQ:SYNC). Algert Global had $0 million invested in the company at the end of the quarter.
Let's also examine hedge fund activity in other stocks similar to Synacor Inc (NASDAQ:SYNC). These stocks are Coda Octopus Group, Inc. (NASDAQ:CODA), Research Solutions, Inc (NASDAQ:RSSS), Portman Ridge Finance Corporation (NASDAQ:PTMN), Biocept, Inc. (NASDAQ:BIOC), SandRidge Energy Inc. (NYSE:SD), Savara, Inc. (NASDAQ:SVRA), and Huttig Building Products, Inc. (NASDAQ:HBP). All of these stocks' market caps match SYNC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CODA,3,390,-3 RSSS,2,13120,1 PTMN,8,3230,-1 BIOC,1,48,-1 SD,14,18753,1 SVRA,9,6958,0 HBP,2,1683,-1 Average,5.6,6312,-0.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.6 hedge funds with bullish positions and the average amount invested in these stocks was $6 million. That figure was $7 million in SYNC's case. SandRidge Energy Inc. (NYSE:SD) is the most popular stock in this table. On the other hand Biocept, Inc. (NASDAQ:BIOC) is the least popular one with only 1 bullish hedge fund positions. Synacor Inc (NASDAQ:SYNC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SYNC is 50.9. 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. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and beat the market again by 16.1 percentage points. Unfortunately SYNC wasn't nearly as popular as these 20 stocks and hedge funds that were betting on SYNC were disappointed as the stock returned -5.3% since the end of September (through 11/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Get real-time email alerts: Follow Synacor Inc. (NASDAQ:SYNC)
Disclosure: None. This article was originally published at Insider Monkey.
Related Content
