Here’s Why Roubaix Capital Wants to Short Sykes Enterprises (SYKE)

Roubaix Capital LLC, an investment management firm, published its ‘Roubaix Fund Composite’ fourth-quarter 2020 Investor Letter – a copy of which can be downloaded here. A net return of 26.63% was recorded by the fund for the Q4 of 2020, outperforming its HFRI Equity Hedge benchmark that delivered a 14.50% return but below its Russell 2000 index that had a 31.37% return. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Roubaix Capital, in their Q4 2020 Investor Letter, said that they continue to identify short opportunities in Sykes Enterprises, Incorporated (NASDAQ: SYKE) as the demand for their services continue to decline. Sykes Enterprises, Incorporated is a business process outsourcing company currently has a $1.6 billion market cap. For the past 3 months, SJM delivered a 9.69% return and settled at $42.09 per share at the closing of February 16th.

Here is what Roubaix Capital has to say about Sykes Enterprises, Incorporated in their Q4 2020 investor letter:

“We also continue to identify short opportunities driven by company specific situations. On the thematic front, we see Sykes Enterprises (SYKE) as a company that has its roots in servicing customers with labor intensive call centers. As the quality of alternatives continues to improve, the demand for SYKE’s services declines. Further, even voice level interactions are improving at exponential rates due to advances in artificial intelligence. While the company is of course adjusting its strategy to adapt, it by no means has the resources of the tech giants and software as a service companies that are making alternative solutions better and cheaper by the day. Identifying the trends that are transforming the business landscape often highlight the companies that are competitively challenged by those very same trends, and we expect this to be a continuous source of investment ideas on the short side of our portfolio.”

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Last December, we published an article telling that Sykes Enterprises, Incorporated (NASDAQ: SYKE) was in 13 hedge fund portfolios. Its all time high statistics is 18. SYKE delivered a 17.94% return in the past 12 months.

Our calculations show that Sykes Enterprises, Incorporated (NASDAQ: SYKE) does not belong in our list of the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

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