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Do Hedge Funds Love Synchrony Financial (SYF)?

We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Synchrony Financial (NYSE:SYF) based on that data.

Synchrony Financial (NYSE:SYF) was in 37 hedge funds’ portfolios at the end of the first quarter of 2020. SYF shareholders have witnessed a decrease in hedge fund sentiment in recent months. There were 44 hedge funds in our database with SYF holdings at the end of the previous quarter. Our calculations also showed that SYF 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 the financial world there are a multitude of metrics stock traders use to analyze publicly traded companies. A couple of the most underrated metrics are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the best money managers can outclass the S&P 500 by a healthy margin (see the details here).

Frank Brosens Taconic Capital

Frank Brosens of Taconic Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s review the latest hedge fund action surrounding Synchrony Financial (NYSE:SYF).

What have hedge funds been doing with Synchrony Financial (NYSE:SYF)?

Heading into the second quarter of 2020, a total of 37 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -16% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards SYF over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Synchrony Financial (NYSE:SYF) was held by Berkshire Hathaway, which reported holding $323.9 million worth of stock at the end of September. It was followed by AQR Capital Management with a $206 million position. Other investors bullish on the company included Southpoint Capital Advisors, PAR Capital Management, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position PAR Capital Management allocated the biggest weight to Synchrony Financial (NYSE:SYF), around 3.42% of its 13F portfolio. Southpoint Capital Advisors is also relatively very bullish on the stock, designating 3.2 percent of its 13F equity portfolio to SYF.

Seeing as Synchrony Financial (NYSE:SYF) has experienced declining sentiment from the smart money, we can see that there were a few hedgies that elected to cut their positions entirely last quarter. Intriguingly, Seth Klarman’s Baupost Group cut the largest stake of all the hedgies followed by Insider Monkey, comprising close to $108.2 million in stock. Louis Bacon’s fund, Moore Global Investments, also sold off its stock, about $34.2 million worth. These moves are important to note, as total hedge fund interest fell by 7 funds last quarter.

Let’s check out hedge fund activity in other stocks similar to Synchrony Financial (NYSE:SYF). These stocks are Moderna, Inc. (NASDAQ:MRNA), Tractor Supply Company (NASDAQ:TSCO), Teva Pharmaceutical Industries Limited (NYSE:TEVA), and Freeport-McMoRan Inc. (NYSE:FCX). All of these stocks’ market caps are closest to SYF’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MRNA 25 424500 13
TSCO 37 510015 -7
TEVA 29 866697 6
FCX 42 770016 -13
Average 33.25 642807 -0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 33.25 hedge funds with bullish positions and the average amount invested in these stocks was $643 million. That figure was $1012 million in SYF’s case. Freeport-McMoRan Inc. (NYSE:FCX) is the most popular stock in this table. On the other hand Moderna, Inc. (NASDAQ:MRNA) is the least popular one with only 25 bullish hedge fund positions. Synchrony Financial (NYSE:SYF) 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 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on SYF as the stock returned 28% in Q2 (through the end of May) 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.