Hedge Funds Are Piling Into Synopsys, Inc. (SNPS)

We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Melvin Capital’s recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Synopsys, Inc. (NASDAQ:SNPS).

Is Synopsys, Inc. (NASDAQ:SNPS) a safe investment today? The smart money was getting more optimistic. The number of long hedge fund positions increased by 2 in recent months. Synopsys, Inc. (NASDAQ:SNPS) was in 43 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 45. Our calculations also showed that SNPS isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

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. Keeping this in mind let’s take a glance at the new hedge fund action regarding Synopsys, Inc. (NASDAQ:SNPS).

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

At the end of the third quarter, a total of 43 of the hedge funds tracked by Insider Monkey were long this stock, a change of 5% from the second quarter of 2021. By comparison, 32 hedge funds held shares or bullish call options in SNPS a year ago. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Alkeon Capital Management, managed by Panayotis Takis Sparaggis, holds the biggest position in Synopsys, Inc. (NASDAQ:SNPS). Alkeon Capital Management has a $1.0035 billion position in the stock, comprising 1.7% of its 13F portfolio. Sitting at the No. 2 spot is Generation Investment Management, managed by David Blood and Al Gore, which holds a $292 million position; the fund has 1.2% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions consist of Cliff Asness’s AQR Capital Management, Noam Gottesman’s GLG Partners and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. In terms of the portfolio weights assigned to each position Crestwood Capital Management allocated the biggest weight to Synopsys, Inc. (NASDAQ:SNPS), around 5.77% of its 13F portfolio. Force Hill Capital Management is also relatively very bullish on the stock, dishing out 4.98 percent of its 13F equity portfolio to SNPS.

Consequently, specific money managers were leading the bulls’ herd. Antipodes Partners, managed by Jacob Mitchell, assembled the biggest position in Synopsys, Inc. (NASDAQ:SNPS). Antipodes Partners had $45.2 million invested in the company at the end of the quarter. Renaissance Technologies also made a $39.4 million investment in the stock during the quarter. The following funds were also among the new SNPS investors: Jinghua Yan’s TwinBeech Capital, Peter Muller’s PDT Partners, and Ran Pang’s Quantamental Technologies.

Let’s go over hedge fund activity in other stocks similar to Synopsys, Inc. (NASDAQ:SNPS). We will take a look at BCE Inc. (NYSE:BCE), eBay Inc (NASDAQ:EBAY), Palantir Technologies Inc. (NYSE:PLTR), The Kraft Heinz Company (NASDAQ:KHC), TE Connectivity Ltd. (NYSE:TEL), Carrier Global Corporation (NYSE:CARR), and The Bank of New York Mellon Corporation (NYSE:BK). This group of stocks’ market caps are similar to SNPS’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 37.9 hedge funds with bullish positions and the average amount invested in these stocks was $3479 million. That figure was $2344 million in SNPS’s case. eBay Inc (NASDAQ:EBAY) is the most popular stock in this table. On the other hand BCE Inc. (NYSE:BCE) is the least popular one with only 15 bullish hedge fund positions. Synopsys, Inc. (NASDAQ:SNPS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SNPS is 76.8. 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on SNPS as the stock returned 13.9% since the end of Q3 (through 11/30) 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.

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