The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtSyros Pharmaceuticals, Inc. (NASDAQ:SYRS) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.
Syros Pharmaceuticals, Inc. (NASDAQ:SYRS) investors should pay attention to a decrease in activity from the world's largest hedge funds in recent months. Our calculations also showed that SYRS 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 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.
[caption id="attachment_364894" align="aligncenter" width="392"] James E. Flynn of Deerfield Management[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a "weekend trading strategy", so we look into his strategy's picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller's investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's take a gander at the latest hedge fund action surrounding Syros Pharmaceuticals, Inc. (NASDAQ:SYRS).
What have hedge funds been doing with Syros Pharmaceuticals, Inc. (NASDAQ:SYRS)?
Heading into the second quarter of 2020, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -15% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in SYRS over the last 18 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Point72 Asset Management was the largest shareholder of Syros Pharmaceuticals, Inc. (NASDAQ:SYRS), with a stake worth $13.5 million reported as of the end of September. Trailing Point72 Asset Management was Samsara BioCapital, which amassed a stake valued at $9.6 million. Deerfield Management, Baker Bros. Advisors, and Portolan Capital Management 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 Samsara BioCapital allocated the biggest weight to Syros Pharmaceuticals, Inc. (NASDAQ:SYRS), around 5.52% of its 13F portfolio. Sio Capital is also relatively very bullish on the stock, setting aside 0.93 percent of its 13F equity portfolio to SYRS.
Due to the fact that Syros Pharmaceuticals, Inc. (NASDAQ:SYRS) has experienced declining sentiment from the aggregate hedge fund industry, it's easy to see that there was a specific group of funds that elected to cut their full holdings by the end of the first quarter. Intriguingly, Israel Englander's Millennium Management cut the biggest position of the 750 funds watched by Insider Monkey, valued at close to $3.6 million in stock. Renaissance Technologies, also said goodbye to its stock, about $0.9 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 2 funds by the end of the first quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Syros Pharmaceuticals, Inc. (NASDAQ:SYRS) but similarly valued. These stocks are Atlas Technical Consultants, Inc. (NASDAQ:ATCX), Insteel Industries Inc (NASDAQ:IIIN), Jernigan Capital Inc (NYSE:JCAP), and Nathan's Famous, Inc. (NASDAQ:NATH). This group of stocks' market values are closest to SYRS's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ATCX,11,11058,0 IIIN,11,20786,5 JCAP,9,22597,-2 NATH,5,31054,0 Average,9,21374,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $21 million. That figure was $43 million in SYRS's case. Atlas Technical Consultants, Inc. (NASDAQ:ATCX) is the most popular stock in this table. On the other hand Nathan's Famous, Inc. (NASDAQ:NATH) is the least popular one with only 5 bullish hedge fund positions. Syros Pharmaceuticals, Inc. (NASDAQ:SYRS) 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 12.3% in 2020 through June 30th but still beat the market by 15.5 percentage points. Hedge funds were also right about betting on SYRS as the stock returned 79.8% in Q2 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.