Was The Smart Money Right About Synchrony Financial (SYF)?

The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the fourth quarter, which unveil their equity positions as of December 31st. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Synchrony Financial (NYSE:SYF).

Synchrony Financial (NYSE:SYF) investors should be aware of an increase in hedge fund interest recently. 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. There were 46 hedge funds in our database with SYF positions at the end of the third quarter. Our calculations also showed that SYF isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. 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 124 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

best high yield dividend stocks according to george soros

George Soros of Soros Fund Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind we’re going to go over the new hedge fund action surrounding Synchrony Financial (NYSE:SYF).

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 one quarter earlier. Below, you can check out the change in hedge fund sentiment towards SYF over the last 22 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Warren Buffett’s Berkshire Hathaway has the biggest position in Synchrony Financial (NYSE:SYF), worth close to $698.6 million, accounting for 0.3% of its total 13F portfolio. The second most bullish fund manager is Southpoint Capital Advisors, led by John Smith Clark, holding a $347.1 million position; 6.1% of its 13F portfolio is allocated to the stock. Some other members of the smart money with similar optimism encompass Paul Reeder and Edward Shapiro’s PAR Capital Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Scott Ferguson’s Sachem Head Capital. 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, dishing out 6.05 percent of its 13F equity portfolio to SYF.

Now, specific money managers were leading the bulls’ herd. Balyasny Asset Management, managed by Dmitry Balyasny, established the most valuable 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 other funds with brand new SYF positions are D. E. Shaw’s D E Shaw, David Rosen’s Rubric Capital Management, and Alexander Mitchell’s Scopus Asset Management.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Synchrony Financial (NYSE:SYF) but similarly valued. We will take a look at SVB Financial Group (NASDAQ:SIVB), EPAM Systems Inc (NYSE:EPAM), Trip.com Group Limited (NASDAQ:TCOM), Entergy Corporation (NYSE:ETR), AmerisourceBergen Corporation (NYSE:ABC), EXACT Sciences Corporation (NASDAQ:EXAS), and Teradyne, Inc. (NASDAQ:TER). All of these stocks’ market caps are similar to SYF’s market cap.

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 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks returned 13.6% in 2021 through April 30th but still managed to beat the market by 1.6 percentage points. Hedge funds were also right about betting on SYF as the stock returned 27.4% since the end of December (through 4/30) 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.