While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus talks, many smart money investors are starting to get cautious towards the current bull run since March and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 30,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Systemax Inc. (NYSE:SYX).
Is SYX a good stock to buy now? Prominent investors were buying. The number of bullish hedge fund positions improved by 4 lately. Systemax Inc. (NYSE:SYX) was in 15 hedge funds’ portfolios at the end of September. The all time high for this statistic is 14. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that SYX isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.
At the moment there are a multitude of methods investors put to use to size up stocks. A pair of the most underrated methods are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the top picks of the best investment managers can outpace the S&P 500 by a significant amount (see the details here).
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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. With all of this in mind let’s check out the new hedge fund action encompassing Systemax Inc. (NYSE:SYX).
Do Hedge Funds Think SYX Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 36% from the previous quarter. By comparison, 11 hedge funds held shares or bullish call options in SYX a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Systemax Inc. (NYSE:SYX) was held by Renaissance Technologies, which reported holding $11.8 million worth of stock at the end of September. It was followed by Royce & Associates with a $5.9 million position. Other investors bullish on the company included Arrowstreet Capital, Citadel Investment Group, and AQR Capital Management. In terms of the portfolio weights assigned to each position Zebra Capital Management allocated the biggest weight to Systemax Inc. (NYSE:SYX), around 0.93% of its 13F portfolio. Prescott Group Capital Management is also relatively very bullish on the stock, earmarking 0.34 percent of its 13F equity portfolio to SYX.
As one would reasonably expect, some big names have jumped into Systemax Inc. (NYSE:SYX) headfirst. Prescott Group Capital Management, managed by Phil Frohlich, created the most valuable position in Systemax Inc. (NYSE:SYX). Prescott Group Capital Management had $0.8 million invested in the company at the end of the quarter. Alec Litowitz and Ross Laser’s Magnetar Capital also initiated a $0.4 million position during the quarter. The other funds with brand new SYX positions are Michael Gelband’s ExodusPoint Capital, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital).
Let’s now take a look at hedge fund activity in other stocks similar to Systemax Inc. (NYSE:SYX). These stocks are Fulgent Genetics, Inc. (NASDAQ:FLGT), Dine Brands Global, Inc. (NYSE:DIN), SFL Corporation Ltd. (NYSE:SFL), AZZ Incorporated (NYSE:AZZ), Gossamer Bio, Inc. (NASDAQ:GOSS), QAD Inc. (NASDAQ:QADB), and Celestica Inc. (NYSE:CLS). This group of stocks’ market valuations are closest to SYX’s market valuation.
|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 13.3 hedge funds with bullish positions and the average amount invested in these stocks was $81 million. That figure was $30 million in SYX’s case. Dine Brands Global, Inc. (NYSE:DIN) is the most popular stock in this table. On the other hand QAD Inc. (NASDAQ:QADB) is the least popular one with only 1 bullish hedge fund positions. Systemax Inc. (NYSE:SYX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SYX is 68.2. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on SYX as the stock returned 56.1% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.