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Is Synlogic, Inc. (SYBX) A Good Stock To Buy?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Synlogic, Inc. (NASDAQ:SYBX) based on that data.

Synlogic, Inc. (NASDAQ:SYBX) investors should be aware of a decrease in support from the world’s most elite money managers recently. Our calculations also showed that SYBX 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Nathan Fischel DAFNA Capital

Nathan Fischel of DAFNA Capital Management

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. With all of this in mind let’s check out the fresh hedge fund action regarding Synlogic, Inc. (NASDAQ:SYBX).

How are hedge funds trading Synlogic, Inc. (NASDAQ:SYBX)?

At Q1’s end, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from one quarter earlier. By comparison, 6 hedge funds held shares or bullish call options in SYBX a year ago. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

Is SYBX A Good Stock To Buy?

When looking at the institutional investors followed by Insider Monkey, OrbiMed Advisors, managed by Samuel Isaly, holds the biggest position in Synlogic, Inc. (NASDAQ:SYBX). OrbiMed Advisors has a $3.5 million position in the stock, comprising 0.1% of its 13F portfolio. On OrbiMed Advisors’s heels is DAFNA Capital Management, managed by Nathan Fischel, which holds a $0.9 million position; 0.4% of its 13F portfolio is allocated to the company. Other members of the smart money that are bullish consist of James E. Flynn’s Deerfield Management, John Overdeck and David Siegel’s Two Sigma Advisors and Renaissance Technologies. In terms of the portfolio weights assigned to each position DAFNA Capital Management allocated the biggest weight to Synlogic, Inc. (NASDAQ:SYBX), around 0.36% of its 13F portfolio. OrbiMed Advisors is also relatively very bullish on the stock, dishing out 0.06 percent of its 13F equity portfolio to SYBX.

Because Synlogic, Inc. (NASDAQ:SYBX) has faced declining sentiment from the smart money, we can see that there exists a select few fund managers that decided to sell off their entire stakes in the first quarter. It’s worth mentioning that Ken Griffin’s Citadel Investment Group sold off the largest investment of the 750 funds monitored by Insider Monkey, comprising close to $0 million in stock. Donald Sussman’s fund, Paloma Partners, also dropped its stock, about $0 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 1 funds in the first quarter.

Let’s check out hedge fund activity in other stocks similar to Synlogic, Inc. (NASDAQ:SYBX). These stocks are ReneSola Ltd. (NYSE:SOL), Big Rock Partners Acquisition Corp. (NASDAQ:BRPA), Kingstone Companies Inc (NASDAQ:KINS), and Cumberland Pharmaceuticals, Inc. (NASDAQ:CPIX). This group of stocks’ market values are similar to SYBX’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SOL 3 17210 1
BRPA 6 2055 -2
KINS 4 4606 -1
CPIX 3 8943 0
Average 4 8204 -0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 4 hedge funds with bullish positions and the average amount invested in these stocks was $8 million. That figure was $6 million in SYBX’s case. Big Rock Partners Acquisition Corp. (NASDAQ:BRPA) is the most popular stock in this table. On the other hand ReneSola Ltd. (NYSE:SOL) is the least popular one with only 3 bullish hedge fund positions. Synlogic, Inc. (NASDAQ:SYBX) is not the most popular stock in this group but hedge fund interest is still above average. 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 13.9% in 2020 through June 10th but still beat the market by 14.2 percentage points. Hedge funds were also right about betting on SYBX as the stock returned 33.7% in Q2 (through June 10th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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