Is Synchrony Financial (SYF) Stock A Buy or Sell?

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31st, so let’s proceed with the discussion of the hedge fund sentiment on Synchrony Financial (NYSE:SYF).

Is SYF stock a buy or sell? Prominent investors were becoming more confident. The number of bullish hedge fund positions advanced by 4 in recent months. Synchrony Financial (NYSE:SYF) was in 50 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 82. Our calculations also showed that SYF isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 46 hedge funds in our database with SYF holdings at the end of September.

In the financial world there are a multitude of metrics shareholders use to evaluate their holdings. A pair of the best metrics are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the best picks of the top hedge fund managers can outclass the broader indices by a significant margin (see the details here).

Scott Ferguson Sachem Head Capital

Scott Ferguson of Sachem Head Capital

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

At fourth quarter’s end, a total of 50 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 9% from the third quarter of 2020. By comparison, 44 hedge funds held shares or bullish call options in SYF 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.

Among these funds, Berkshire Hathaway held the most valuable stake in Synchrony Financial (NYSE:SYF), which was worth $698.6 million at the end of the fourth quarter. On the second spot was Southpoint Capital Advisors which amassed $347.1 million worth of shares. PAR Capital Management, Arrowstreet Capital, and Sachem Head 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 PAR Capital Management allocated the biggest weight to Synchrony Financial (NYSE:SYF), around 7.04% of its 13F portfolio. Southpoint Capital Advisors is also relatively very bullish on the stock, setting aside 6.05 percent of its 13F equity portfolio to SYF.

As one would reasonably expect, specific money managers have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, established the largest position in Synchrony Financial (NYSE:SYF). Balyasny Asset Management had $62.2 million invested in the company at the end of the quarter. George Soros’s Soros Fund Management also initiated a $22.1 million position during the quarter. The following funds were also among the new SYF investors: D. E. Shaw’s D E Shaw, David Rosen’s Rubric Capital Management, and Alexander Mitchell’s Scopus Asset Management.

Let’s also examine hedge fund activity in other stocks similar to Synchrony Financial (NYSE:SYF). These stocks are SVB Financial Group (NASDAQ:SIVB), EPAM Systems Inc (NYSE:EPAM), Group Limited (NASDAQ:TCOM), Entergy Corporation (NYSE:ETR), AmerisourceBergen Corporation (NYSE:ABC), EXACT Sciences Corporation (NASDAQ:EXAS), and Teradyne, Inc. (NASDAQ:TER). This group of stocks’ market valuations are similar to SYF’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SIVB 31 707703 4
EPAM 32 616823 -1
TCOM 34 1667634 4
ETR 36 829666 9
ABC 47 681405 2
EXAS 40 1898594 6
TER 47 1417981 5
Average 38.1 1117115 4.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 38.1 hedge funds with bullish positions and the average amount invested in these stocks was $1117 million. That figure was $2465 million in SYF’s case. AmerisourceBergen Corporation (NYSE:ABC) is the most popular stock in this table. On the other hand SVB Financial Group (NASDAQ:SIVB) is the least popular one with only 31 bullish hedge fund positions. Compared to these stocks Synchrony Financial (NYSE:SYF) is more popular among hedge funds. Our overall hedge fund sentiment score for SYF is 77.3. 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 returned 5.3% in 2021 through March 19th but still managed to beat the market by 0.8 percentage points. Hedge funds were also right about betting on SYF as the stock returned 18.8% since the end of December (through 3/19) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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