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Did Hedge Funds Make The Right Call On SYNNEX Corporation (SNX) ?

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 first 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 4.5 years and analyze what the smart money thinks of SYNNEX Corporation (NYSE:SNX) based on that data and determine whether they were really smart about the stock.

SYNNEX Corporation (NYSE:SNX) was in 24 hedge funds’ portfolios at the end of the first quarter of 2020. SNX has seen an increase in enthusiasm from smart money in recent months. There were 22 hedge funds in our database with SNX positions at the end of the previous quarter. Our calculations also showed that SNX isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

In today’s marketplace there are a lot of formulas shareholders employ to analyze their holdings. A couple of the most innovative formulas are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the top money managers can outclass the S&P 500 by a healthy margin (see the details here).

Richard Driehaus of Driehaus Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world 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. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so if you have any good ideas send us an email. Now let’s view the fresh hedge fund action encompassing SYNNEX Corporation (NYSE:SNX).

How are hedge funds trading SYNNEX Corporation (NYSE:SNX)?

Heading into the second quarter of 2020, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of 9% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SNX over the last 18 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

Is SNX A Good Stock To Buy?

Among these funds, AQR Capital Management held the most valuable stake in SYNNEX Corporation (NYSE:SNX), which was worth $89.4 million at the end of the third quarter. On the second spot was Lyrical Asset Management which amassed $82.4 million worth of shares. Citadel Investment Group, Renaissance Technologies, and Woodline Partners were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Lyrical Asset Management allocated the biggest weight to SYNNEX Corporation (NYSE:SNX), around 2.03% of its 13F portfolio. Horseman Capital Management is also relatively very bullish on the stock, dishing out 0.77 percent of its 13F equity portfolio to SNX.

As one would reasonably expect, specific money managers have been driving this bullishness. GLG Partners, managed by Noam Gottesman, assembled the most outsized position in SYNNEX Corporation (NYSE:SNX). GLG Partners had $0.9 million invested in the company at the end of the quarter. Donald Sussman’s Paloma Partners also made a $0.8 million investment in the stock during the quarter. The other funds with brand new SNX positions are D. E. Shaw’s D E Shaw, Frederick DiSanto’s Ancora Advisors, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as SYNNEX Corporation (NYSE:SNX) but similarly valued. These stocks are MAXIMUS, Inc. (NYSE:MMS), PS Business Parks Inc (NYSE:PSB), HUYA Inc. (NYSE:HUYA), and Woodward Inc (NASDAQ:WWD). All of these stocks’ market caps are closest to SNX’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MMS 26 132535 2
PSB 17 83370 2
HUYA 18 265315 -3
WWD 24 222038 2
Average 21.25 175815 0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.25 hedge funds with bullish positions and the average amount invested in these stocks was $176 million. That figure was $264 million in SNX’s case. MAXIMUS, Inc. (NYSE:MMS) is the most popular stock in this table. On the other hand PS Business Parks Inc (NYSE:PSB) is the least popular one with only 17 bullish hedge fund positions. SYNNEX Corporation (NYSE:SNX) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th but still beat the market by 15.5 percentage points. Hedge funds were also right about betting on SNX as the stock returned 63.8% in Q2 and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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