Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Synacor Inc (NASDAQ:SYNC).
Synacor Inc (NASDAQ:SYNC) was in 4 hedge funds’ portfolios at the end of March. SYNC shareholders have witnessed a decrease in activity from the world’s largest hedge funds of late. There were 6 hedge funds in our database with SYNC positions at the end of the previous quarter. Our calculations also showed that SYNC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 51 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a look at the latest hedge fund action encompassing Synacor Inc (NASDAQ:SYNC).
How have hedgies been trading Synacor Inc (NASDAQ:SYNC)?
At Q1’s end, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -33% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SYNC over the last 18 quarters. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Fondren Management, managed by Bradley Louis Radoff, holds the biggest position in Synacor Inc (NASDAQ:SYNC). Fondren Management has a $2.2 million position in the stock, comprising 5.5% of its 13F portfolio. The second most bullish fund manager is Renaissance Technologies, holding a $2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism include John W. Rogers’s Ariel Investments, Frederick DiSanto’s Ancora Advisors and . In terms of the portfolio weights assigned to each position Fondren Management allocated the biggest weight to Synacor Inc (NASDAQ:SYNC), around 5.51% of its 13F portfolio. Ariel Investments is also relatively very bullish on the stock, earmarking 0.03 percent of its 13F equity portfolio to SYNC.
Seeing as Synacor Inc (NASDAQ:SYNC) has experienced bearish sentiment from hedge fund managers, we can see that there lies a certain “tier” of hedgies that slashed their positions entirely heading into Q4. At the top of the heap, Charles Frumberg’s Emancipation Capital cut the largest position of all the hedgies tracked by Insider Monkey, comprising about $0.7 million in stock, and Peter Algert and Kevin Coldiron’s Algert Coldiron Investors was right behind this move, as the fund sold off about $0 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 2 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks similar to Synacor Inc (NASDAQ:SYNC). These stocks are Vuzix Corporation (NASDAQ:VUZI), Iterum Therapeutics plc (NASDAQ:ITRM), TETRA Technologies, Inc. (NYSE:TTI), and HighPoint Resources Corporation (NYSE:HPR). All of these stocks’ market caps match SYNC’s market cap.
|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 4.5 hedge funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $6 million in SYNC’s case. HighPoint Resources Corporation (NYSE:HPR) is the most popular stock in this table. On the other hand Vuzix Corporation (NASDAQ:VUZI) is the least popular one with only 1 bullish hedge fund positions. Synacor Inc (NASDAQ:SYNC) is not the least popular stock in this group but hedge fund interest is still below average. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and surpassed the market by 13.2 percentage points. Unfortunately SYNC wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); SYNC investors were disappointed as the stock returned 7.8% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.