As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the third quarter. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Synovus Financial Corp. (NYSE:SNV).
Hedge fund interest in Synovus Financial Corp. (NYSE:SNV) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Syneos Health, Inc. (NASDAQ:SYNH), Zynga Inc (NASDAQ:ZNGA), and Jabil Inc. (NYSE:JBL) to gather more data points. Our calculations also showed that SNV isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a look at the key hedge fund action surrounding Synovus Financial Corp. (NYSE:SNV).
How have hedgies been trading Synovus Financial Corp. (NYSE:SNV)?
Heading into the fourth quarter of 2019, a total of 36 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SNV over the last 17 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the most valuable position in Synovus Financial Corp. (NYSE:SNV). Citadel Investment Group has a $69.5 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Two Sigma Advisors, managed by John Overdeck and David Siegel, which holds a $50 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other peers that are bullish include Anand Parekh’s Alyeska Investment Group, Ravi Chopra’s Azora Capital and Emanuel J. Friedman’s EJF Capital. In terms of the portfolio weights assigned to each position Azora Capital allocated the biggest weight to Synovus Financial Corp. (NYSE:SNV), around 8.66% of its portfolio. Strycker View Capital is also relatively very bullish on the stock, dishing out 4.59 percent of its 13F equity portfolio to SNV.
Judging by the fact that Synovus Financial Corp. (NYSE:SNV) has experienced declining sentiment from the entirety of the hedge funds we track, logic holds that there lies a certain “tier” of funds who were dropping their entire stakes last quarter. At the top of the heap, James Dinan’s York Capital Management said goodbye to the largest position of the 750 funds watched by Insider Monkey, comprising close to $31.3 million in stock. Bruce Kovner’s fund, Caxton Associates, also cut its stock, about $7.9 million worth. These transactions are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now take a look at hedge fund activity in other stocks similar to Synovus Financial Corp. (NYSE:SNV). These stocks are Syneos Health, Inc. (NASDAQ:SYNH), Zynga Inc (NASDAQ:ZNGA), Jabil Inc. (NYSE:JBL), and BWX Technologies Inc (NYSE:BWXT). This group of stocks’ market values match SNV’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.5 hedge funds with bullish positions and the average amount invested in these stocks was $462 million. That figure was $462 million in SNV’s case. Zynga Inc (NASDAQ:ZNGA) is the most popular stock in this table. On the other hand Syneos Health, Inc. (NASDAQ:SYNH) is the least popular one with only 20 bullish hedge fund positions. Synovus Financial Corp. (NYSE:SNV) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on SNV, though not to the same extent, as the stock returned 6.5% during the first two months of the fourth quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.