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Syneos Health, Inc. (SYNH): Are Hedge Funds Right About This Stock?

World-class money managers like Ken Griffin and Barry Rosenstein only invest their wealthy clients’ money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It’s not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It’s also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.

Is Syneos Health, Inc. (NASDAQ:SYNH) a buy here? The smart money is taking a bullish view. The number of long hedge fund bets advanced by 2 recently. Our calculations also showed that SYNH isn’t among the 30 most popular stocks among hedge funds.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Sander Gerber of Hudson Bay Capital

Let’s view the fresh hedge fund action surrounding Syneos Health, Inc. (NASDAQ:SYNH).

How are hedge funds trading Syneos Health, Inc. (NASDAQ:SYNH)?

Heading into the second quarter of 2019, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from the fourth quarter of 2018. The graph below displays the number of hedge funds with bullish position in SYNH over the last 15 quarters. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

SYNH_jun2019

The largest stake in Syneos Health, Inc. (NASDAQ:SYNH) was held by Viking Global, which reported holding $114.9 million worth of stock at the end of March. It was followed by Millennium Management with a $48.9 million position. Other investors bullish on the company included Cardinal Capital, Rubric Capital Management, and Hawk Ridge Management.

Now, key hedge funds have jumped into Syneos Health, Inc. (NASDAQ:SYNH) headfirst. Rubric Capital Management, managed by David Rosen, assembled the biggest position in Syneos Health, Inc. (NASDAQ:SYNH). Rubric Capital Management had $23.1 million invested in the company at the end of the quarter. David Brown’s Hawk Ridge Management also made a $19.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Brandon Haley’s Holocene Advisors, Sander Gerber’s Hudson Bay Capital Management, and Michael Castor’s Sio Capital.

Let’s go over hedge fund activity in other stocks similar to Syneos Health, Inc. (NASDAQ:SYNH). These stocks are Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI), Morningstar, Inc. (NASDAQ:MORN), Gentex Corporation (NASDAQ:GNTX), and New York Community Bancorp, Inc. (NYSE:NYCB-U). This group of stocks’ market caps match SYNH’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
OLLI 22 155022 -2
MORN 21 225704 1
GNTX 23 308447 0
NYCB-U 3 26107 1
Average 17.25 178820 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.25 hedge funds with bullish positions and the average amount invested in these stocks was $179 million. That figure was $333 million in SYNH’s case. Gentex Corporation (NASDAQ:GNTX) is the most popular stock in this table. On the other hand New York Community Bancorp, Inc. (NYSE:NYCB-U) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Syneos Health, Inc. (NASDAQ:SYNH) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately SYNH wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on SYNH were disappointed as the stock returned -5.9% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market in Q2.

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

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