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Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that's why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can't match. So should one consider investing in Sify Technologies Limited (NASDAQ:SIFY)? The smart money sentiment can provide an answer to this question.
Is SIFY a good stock to buy? Sify Technologies Limited (NASDAQ:SIFY) investors should be aware of an increase in activity from the world's largest hedge funds recently. Sify Technologies Limited (NASDAQ:SIFY) was in 5 hedge funds' portfolios at the end of March. The all time high for this statistic is 4. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 4 hedge funds in our database with SIFY holdings at the end of December. Our calculations also showed that SIFY isn't among the 30 most popular stocks among hedge funds (click for Q1 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 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.
Donald Sussman of Paloma Partners
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $23 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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. With all of this in mind we're going to take a look at the latest hedge fund action surrounding Sify Technologies Limited (NASDAQ:SIFY).
Do Hedge Funds Think SIFY Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from the previous quarter. On the other hand, there were a total of 1 hedge funds with a bullish position in SIFY a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Millennium Management, managed by Israel Englander, holds the most valuable position in Sify Technologies Limited (NASDAQ:SIFY). Millennium Management has a $1.6 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is Renaissance Technologies, holding a $1.4 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors that are bullish consist of Ken Griffin's Citadel Investment Group, and Donald Sussman's Paloma Partners. In terms of the portfolio weights assigned to each position Greenhaven Road Investment Management allocated the biggest weight to Sify Technologies Limited (NASDAQ:SIFY), around 0.01% of its 13F portfolio. Paloma Partners is also relatively very bullish on the stock, setting aside 0.0034 percent of its 13F equity portfolio to SIFY.
Now, key hedge funds were leading the bulls' herd. Millennium Management, managed by Israel Englander, assembled the most outsized position in Sify Technologies Limited (NASDAQ:SIFY). Millennium Management had $1.6 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also made a $0.2 million investment in the stock during the quarter. The only other fund with a brand new SIFY position is Donald Sussman's Paloma Partners.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Sify Technologies Limited (NASDAQ:SIFY) but similarly valued. These stocks are Carriage Services, Inc. (NYSE:CSV), China Yuchai International Limited (NYSE:CYD), Bicycle Therapeutics plc (NASDAQ:BCYC), American Vanguard Corp. (NYSE:AVD), Akoustis Technologies, Inc. (NASDAQ:AKTS), Digi International Inc. (NASDAQ:DGII), and Boingo Wireless Inc (NASDAQ:WIFI). This group of stocks' market values match SIFY's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CSV,11,65276,-4 CYD,8,69474,-1 BCYC,11,155267,3 AVD,7,24292,-1 AKTS,8,30410,-2 DGII,12,55532,3 WIFI,28,426218,13 Average,12.1,118067,1.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.1 hedge funds with bullish positions and the average amount invested in these stocks was $118 million. That figure was $4 million in SIFY's case. Boingo Wireless Inc (NASDAQ:WIFI) is the most popular stock in this table. On the other hand American Vanguard Corp. (NYSE:AVD) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Sify Technologies Limited (NASDAQ:SIFY) is even less popular than AVD. Our overall hedge fund sentiment score for SIFY is 36. 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. Hedge funds dodged a bullet by taking a bearish stance towards SIFY. Our calculations showed that the top 10 most popular hedge fund stocks returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.4% in 2021 through June 18th but managed to beat the market again by 6.1 percentage points. Unfortunately SIFY wasn't nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); SIFY investors were disappointed as the stock returned 4.2% since the end of the first quarter (through 6/18) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.