In this article we will analyze whether SYNNEX Corporation (NYSE:SNX) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
SYNNEX Corporation (NYSE:SNX) was in 20 hedge funds’ portfolios at the end of June. The all time high for this statistic is 27. SNX investors should pay attention to an increase in activity from the world’s largest hedge funds lately. There were 15 hedge funds in our database with SNX holdings at the end of March. Our calculations also showed that SNX isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Peter Rathjens of Arrowstreet Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. 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. With all of this in mind let’s take a glance at the recent hedge fund action regarding SYNNEX Corporation (NYSE:SNX).
Do Hedge Funds Think SNX Is A Good Stock To Buy Now?
At Q2’s end, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from the previous quarter. By comparison, 24 hedge funds held shares or bullish call options in SNX a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Abrams Bison Investments was the largest shareholder of SYNNEX Corporation (NYSE:SNX), with a stake worth $292.2 million reported as of the end of June. Trailing Abrams Bison Investments was Lyrical Asset Management, which amassed a stake valued at $126.5 million. AQR Capital Management, Goodnow Investment Group, and Arrowstreet Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Abrams Bison Investments allocated the biggest weight to SYNNEX Corporation (NYSE:SNX), around 25.33% of its 13F portfolio. Goodnow Investment Group is also relatively very bullish on the stock, setting aside 3.01 percent of its 13F equity portfolio to SNX.
As industrywide interest jumped, some big names have jumped into SYNNEX Corporation (NYSE:SNX) headfirst. Shellback Capital, managed by Doug Gordon, Jon Hilsabeck and Don Jabro, established the most outsized position in SYNNEX Corporation (NYSE:SNX). Shellback Capital had $5.8 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also initiated a $2.3 million position during the quarter. The other funds with new positions in the stock are D. E. Shaw’s D E Shaw, Israel Englander’s Millennium Management, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as SYNNEX Corporation (NYSE:SNX) but similarly valued. These stocks are Callaway Golf Company (NYSE:ELY), Lumentum Holdings Inc (NASDAQ:LITE), Huaneng Power International Inc (NYSE:HNP), EQT Corporation (NYSE:EQT), Colfax Corporation (NYSE:CFX), J2 Global Inc (NASDAQ:JCOM), and Sarepta Therapeutics Inc (NASDAQ:SRPT). This group of stocks’ market valuations match SNX’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ELY | 39 | 559436 | -1 |
| LITE | 29 | 334727 | -2 |
| HNP | 4 | 4331 | 0 |
| EQT | 43 | 468450 | 8 |
| CFX | 31 | 1074229 | -18 |
| JCOM | 22 | 414616 | 0 |
| SRPT | 34 | 539734 | 1 |
| Average | 28.9 | 485075 | -1.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.9 hedge funds with bullish positions and the average amount invested in these stocks was $485 million. That figure was $629 million in SNX’s case. EQT Corporation (NYSE:EQT) is the most popular stock in this table. On the other hand Huaneng Power International Inc (NYSE:HNP) is the least popular one with only 4 bullish hedge fund positions. SYNNEX Corporation (NYSE:SNX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SNX is 52.7. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 October 22nd and surpassed the market again by 1.6 percentage points. Unfortunately SNX wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); SNX investors were disappointed as the stock returned -13.4% since the end of June (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
Follow Td Synnex Corp (NYSE:SNX)
Follow Td Synnex Corp (NYSE:SNX)
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Disclosure: None. This article was originally published at Insider Monkey.
