How Synchronoss Technologies, Inc. (SNCR) Stacks Up Against Its Peers

At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.

Is Synchronoss Technologies, Inc. (NASDAQ:SNCR) a superb stock to buy now? The smart money is definitely in an optimistic mood. The number of bullish hedge fund investments advanced by 2 in recent months. SNCR was in 18 hedge funds’ portfolios at the end of September There were 16 hedge funds in our database with SNCR positions at the end of the previous quarter. 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 The Dolan Company (NYSE:DM), Haemonetics Corporation (NYSE:HAE), and Commercial Metals Company (NYSE:CMC) to gather more data points.

We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.

How have hedgies been trading Synchronoss Technologies, Inc. (NASDAQ:SNCR)?

At Q3’s end, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, an increase of 13% from the second quarter of 2016. The graph below displays the number of hedge funds with bullish position in SNCR over the last 5 quarters. 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 Insider Monkey’s hedge fund database, Shellback Capital, led by Doug Gordon, Jon Hilsabeck and Don Jabro, holds the number one position in Synchronoss Technologies, Inc. (NASDAQ:SNCR). Shellback Capital has a $10.9 million position in the stock. On Shellback Capital’s heels is D E Shaw, led by D. E. Shaw, holding a $7.1 million position. Remaining hedge funds and institutional investors that hold long positions include Peter A. Wright’s P.A.W. Capital Partners and Nick Niell’s Arrowgrass Capital Partners. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Consequently, key hedge funds have jumped into Synchronoss Technologies, Inc. (NASDAQ:SNCR) headfirst. Shellback Capital initiated the biggest position in Synchronoss Technologies, Inc. (NASDAQ:SNCR). Gregg Moskowitz’s Interval Partners also made a $5.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Ken Griffin’s Citadel Investment Group and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Synchronoss Technologies, Inc. (NASDAQ:SNCR) but similarly valued. We will take a look at The Dolan Company (NYSE:DM), Haemonetics Corporation (NYSE:HAE), Commercial Metals Company (NYSE:CMC), and KLX Inc (NASDAQ:KLXI). This group of stocks’ market valuations are similar to SNCR’s market valuation.

As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $172 million. That figure was $42 million in SNCR’s case. KLX Inc (NASDAQ:KLXI) is the most popular stock in this table. On the other hand The Dolan Company (NYSE:DM) is the least popular one with only 4 bullish hedge fund positions. Synchronoss Technologies, Inc. (NASDAQ:SNCR) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard KLXI might be a better candidate to consider taking a long position in.

Disclosure: None