Hedge Funds Are Selling Synaptics Incorporated (SYNA)

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 Synaptics Incorporated (NASDAQ:SYNA).

Is Synaptics Incorporated (NASDAQ:SYNA) a buy right now? Prominent investors were in a bearish mood. The number of long hedge fund bets went down by 3 lately. Synaptics Incorporated (NASDAQ:SYNA) was in 25 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 28. Our calculations also showed that SYNA isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 28 hedge funds in our database with SYNA positions at the end of the fourth quarter.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Richard Driehaus of Driehaus Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery 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. 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 homepage. Now we’re going to take a look at the recent hedge fund action encompassing Synaptics Incorporated (NASDAQ:SYNA).

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

Heading into the second quarter of 2021, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -11% from one quarter earlier. On the other hand, there were a total of 26 hedge funds with a bullish position in SYNA a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Fisher Asset Management, managed by Ken Fisher, holds the most valuable position in Synaptics Incorporated (NASDAQ:SYNA). Fisher Asset Management has a $161.2 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is Israel Englander of Millennium Management, with a $81.7 million position; 0.1% of its 13F portfolio is allocated to the company. Other professional money managers with similar optimism encompass Joe Milano’s Greenhouse Funds, D. E. Shaw’s D E Shaw and Richard Driehaus’s Driehaus Capital. In terms of the portfolio weights assigned to each position Greenhouse Funds allocated the biggest weight to Synaptics Incorporated (NASDAQ:SYNA), around 7.09% of its 13F portfolio. Trigran Investments is also relatively very bullish on the stock, dishing out 2.55 percent of its 13F equity portfolio to SYNA.

Seeing as Synaptics Incorporated (NASDAQ:SYNA) has faced a decline in interest from hedge fund managers, it’s safe to say that there lies a certain “tier” of hedgies who sold off their full holdings heading into Q2. Interestingly, Xiuping Li’s Opti Capital Management said goodbye to the biggest stake of the 750 funds monitored by Insider Monkey, worth close to $24.1 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital was right behind this move, as the fund said goodbye to about $9.6 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 3 funds heading into Q2.

Let’s now take a look at hedge fund activity in other stocks similar to Synaptics Incorporated (NASDAQ:SYNA). We will take a look at Shake Shack Inc (NYSE:SHAK), Neogen Corporation (NASDAQ:NEOG), Valvoline Inc. (NYSE:VVV), The Hanover Insurance Group, Inc. (NYSE:THG), Sabre Corporation (NASDAQ:SABR), TTEC Holdings, Inc. (NASDAQ:TTEC), and nVent Electric plc (NYSE:NVT). This group of stocks’ market caps are similar to SYNA’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SHAK 23 560136 -2
NEOG 10 29017 -6
VVV 23 677540 -4
THG 18 95544 -2
SABR 40 1280794 -6
TTEC 10 55504 0
NVT 31 338555 1
Average 22.1 433870 -2.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.1 hedge funds with bullish positions and the average amount invested in these stocks was $434 million. That figure was $534 million in SYNA’s case. Sabre Corporation (NASDAQ:SABR) is the most popular stock in this table. On the other hand Neogen Corporation (NASDAQ:NEOG) is the least popular one with only 10 bullish hedge fund positions. Synaptics Incorporated (NASDAQ:SYNA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SYNA is 53.8. 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 24% in 2021 through July 9th and still beat the market by 6.7 percentage points. Hedge funds were also right about betting on SYNA, though not to the same extent, as the stock returned 14.4% since Q1 (through July 9th) and outperformed the market as well.

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