Is SNX Stock A Buy or Sell?

At Insider Monkey, we pore over the filings of nearly 887 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of December 31st. In this article, we will use that wealth of knowledge to determine whether or not SYNNEX Corporation (NYSE:SNX) makes for a good investment right now.

Is SNX stock a buy? SYNNEX Corporation (NYSE:SNX) was in 24 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 27. SNX shareholders have witnessed a decrease in support from the world’s most elite money managers of late. There were 27 hedge funds in our database with SNX positions at the end of the third quarter. Our calculations also showed that SNX isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. 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 website. Keeping this in mind we’re going to take a glance at the new hedge fund action regarding SYNNEX Corporation (NYSE:SNX).

Do Hedge Funds Think SNX Is A Good Stock To Buy Now?

At the end of December, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -11% from the previous quarter. On the other hand, there were a total of 22 hedge funds with a bullish position in SNX a year ago. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

More specifically, Abrams Bison Investments was the largest shareholder of SYNNEX Corporation (NYSE:SNX), with a stake worth $170.2 million reported as of the end of December. Trailing Abrams Bison Investments was Lyrical Asset Management, which amassed a stake valued at $87.9 million. AQR Capital Management, Arrowstreet Capital, and Greenlight 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 19.22% of its 13F portfolio. Lyrical Asset Management is also relatively very bullish on the stock, setting aside 1.21 percent of its 13F equity portfolio to SNX.

Seeing as SYNNEX Corporation (NYSE:SNX) has experienced declining sentiment from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of funds that slashed their entire stakes last quarter. Interestingly, Dmitry Balyasny’s Balyasny Asset Management said goodbye to the biggest investment of the 750 funds followed by Insider Monkey, comprising an estimated $63.1 million in stock, and Robert Joseph Caruso’s Select Equity Group was right behind this move, as the fund dumped about $23.4 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 3 funds last quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as SYNNEX Corporation (NYSE:SNX) but similarly valued. These stocks are HollyFrontier Corporation (NYSE:HFC), PNM Resources, Inc. (NYSE:PNM), PTC Therapeutics, Inc. (NASDAQ:PTCT), LivePerson, Inc. (NASDAQ:LPSN), Novanta Inc. (NASDAQ:NOVT), JBG SMITH Properties (NYSE:JBGS), and New Residential Investment Corp (NYSE:NRZ). This group of stocks’ market caps are similar to SNX’s market cap.

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As you can see these stocks had an average of 25.4 hedge funds with bullish positions and the average amount invested in these stocks was $330 million. That figure was $444 million in SNX’s case. LivePerson, Inc. (NASDAQ:LPSN) is the most popular stock in this table. On the other hand JBG SMITH Properties (NYSE:JBGS) is the least popular one with only 16 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 49.7. 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. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. A small number of hedge funds were also right about betting on SNX as the stock returned 55.3% since the end of the fourth quarter (through 4/19) and outperformed the market by an even larger margin.

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