Synchronoss Technologies, Inc. (NASDAQ:SNCR), OncoGenex Pharmaceuticals Inc (NASDAQ:OGXI) and Cemtrex Inc (NASDAQ:CETX) are in the public eye today for the wrong reasons as their shares are seeing significant declines, as major indices lose 1%-to-1.8% in intraday trading. Nonetheless, it should be noted that we are going to discuss these three firms based on how hedge funds have been treating them in order to gain a more rounded understanding of whether they may be candidates for buying, holding, or selling. Tracking hedge fund activity, especially in nano- and small-cap stocks like those of Synchronoss Technologies, OncoGenex Pharmaceuticals, and Cemtrex can be a very powerful tool in the arsenal of the informed investor.
So let’s first analyze how tracking hedge funds can help an everyday investor. Through our research, we discovered that a portfolio of the 15 most popular small-cap picks of hedge funds beat the S&P500 Total Return Index by nearly a percentage point per month on average between 1999 and 2012. On the other hand, the most popular large-cap picks of hedge funds underperformed the same index by seven basis points per month during the same period. This is likely a surprise to many investors, who think of small-caps as risky, unpredictable stocks and put more faith in large-cap stocks. In forward tests since August 2012, these top small-cap stocks beat the market by an impressive 60.4 percentage points, returning 118% (read the details here). Hence, a retail investor needs to isolate himself from the herd and take advantage of the best growth opportunities in the market by concentrating on small-cap stocks.
Taking this into account, the first firm we will be looking at is Synchronoss Technologies, Inc. (NASDAQ:SNCR), the shares of which lost nearly 25% of their value before paring their losses down to just over 12%. The volatility and sharp decline follows a milder but still significant slide of over 4% yesterday. It should be noted that with its slump today, Synchronoss has hit a new low for 2015, and is down by 21.5% year-to-date.
Hedge funds that we track are not overly very keen on Synchronoss Technologies, Inc. (NASDAQ:SNCR) of late. Although there was an increase of three hedge funds with long positions in the stock during the second quarter to 21, their total investment in the company decreased by 3.19% to about $96.86 million. The stock declined by 3.65%, however, meaning there was a slight increase in hedge fund investment in the firm, but very minimal considering three new investors took up positions. Furthermore, only 4.90% of the firm’s outstanding shares are owned by hedge funds we follow, which is low for a small-cap stock. Brian Ashford-Russell and Tim Woolley’s Polar Capital held the largest stake in Synchronoss at the end of June among the funds we track, owning 1.09 million shares, down by 69% quarter-over-quarter.