Did Hedge Funds Get Syneos Health, Inc. (SYNH) Right?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Syneos Health, Inc. (NASDAQ:SYNH) based on that data and determine whether they were really smart about the stock.

Hedge fund interest in Syneos Health, Inc. (NASDAQ:SYNH) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that SYNH isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Reliance Steel & Aluminum Co. (NYSE:RS), GXO Logistics Inc. (NYSE:GXO), and Crocs, Inc. (NASDAQ:CROX) to gather more data points.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. With all of this in mind we’re going to take a look at the fresh hedge fund action encompassing Syneos Health, Inc. (NASDAQ:SYNH).

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

Heading into the fourth quarter of 2021, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 40 hedge funds with a bullish position in SYNH a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, GQG Partners, managed by Rajiv Jain, holds the largest position in Syneos Health, Inc. (NASDAQ:SYNH). GQG Partners has a $92.4 million position in the stock, comprising 0.3% of its 13F portfolio. Coming in second is Cardinal Capital, led by Amy Minella, holding a $81.2 million position; 2% of its 13F portfolio is allocated to the company. Other professional money managers with similar optimism contain Michael Lowenstein’s Kensico Capital, Anthony Bozza’s Lakewood Capital Management and Cliff Asness’s AQR Capital Management. In terms of the portfolio weights assigned to each position Sectoral Asset Management allocated the biggest weight to Syneos Health, Inc. (NASDAQ:SYNH), around 2.3% of its 13F portfolio. Lakewood Capital Management is also relatively very bullish on the stock, setting aside 2.01 percent of its 13F equity portfolio to SYNH.

Judging by the fact that Syneos Health, Inc. (NASDAQ:SYNH) has faced declining sentiment from the aggregate hedge fund industry, it’s safe to say that there were a few fund managers that slashed their entire stakes in the third quarter. Intriguingly, Ken Griffin’s Citadel Investment Group dropped the largest position of all the hedgies monitored by Insider Monkey, comprising about $46.8 million in stock. Ryan Tolkin (CIO)’s fund, Schonfeld Strategic Advisors, also sold off its stock, about $20.4 million worth. These moves are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s check out hedge fund activity in other stocks similar to Syneos Health, Inc. (NASDAQ:SYNH). These stocks are Reliance Steel & Aluminum Co. (NYSE:RS), GXO Logistics Inc. (NYSE:GXO), Crocs, Inc. (NASDAQ:CROX), First Horizon Corporation (NYSE:FHN), Juniper Networks, Inc. (NYSE:JNPR), Oatly Group AB (NASDAQ:OTLY), and Dolby Laboratories, Inc. (NYSE:DLB). This group of stocks’ market caps match SYNH’s market cap.

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As you can see these stocks had an average of 26.3 hedge funds with bullish positions and the average amount invested in these stocks was $537 million. That figure was $475 million in SYNH’s case. Crocs, Inc. (NASDAQ:CROX) is the most popular stock in this table. On the other hand Oatly Group AB (NASDAQ:OTLY) is the least popular one with only 13 bullish hedge fund positions. Syneos Health, Inc. (NASDAQ:SYNH) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SYNH is 71.4. 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 29.6% in 2021 and still managed to beat the market by another 3.6 percentage points. Hedge funds were somewhat right about betting on SYNH as the stock returned 3.5% since the end of September (through January 31st) and outperformed the top 5 hedge fund stocks but not the market. This is a rare phenomenon as top hedge fund stocks usually beat the market over the long-term.

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