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The Insider Monkey team has completed processing the quarterly 13F filings for the December quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Syneos Health, Inc. (NASDAQ:SYNH).
Is SYNH stock a buy? Prominent investors were in a bearish mood. The number of bullish hedge fund positions retreated by 11 in recent months. Syneos Health, Inc. (NASDAQ:SYNH) was in 29 hedge funds' portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 40. Our calculations also showed that SYNH isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still 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).
Arthur B Cohen and Joseph Healey of Healthcor Management LP
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we heard that billionaire Peter Thiel is backing this psychedelic-drug startup. So, we are taking a closer look at this space. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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. Now let's go over the fresh hedge fund action regarding Syneos Health, Inc. (NASDAQ:SYNH).
Do Hedge Funds Think SYNH Is A Good Stock To Buy Now?
At Q4's end, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -28% from the third quarter of 2020. By comparison, 20 hedge funds held shares or bullish call options in SYNH 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.
More specifically, Citadel Investment Group was the largest shareholder of Syneos Health, Inc. (NASDAQ:SYNH), with a stake worth $138.5 million reported as of the end of December. Trailing Citadel Investment Group was Polar Capital, which amassed a stake valued at $71.3 million. Cardinal Capital, Healthcor Management LP, and Bloom Tree Partners 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 Bloom Tree Partners allocated the biggest weight to Syneos Health, Inc. (NASDAQ:SYNH), around 3.07% of its 13F portfolio. Endurant Capital Management is also relatively very bullish on the stock, setting aside 2.5 percent of its 13F equity portfolio to SYNH.
Due to the fact that Syneos Health, Inc. (NASDAQ:SYNH) has witnessed a decline in interest from the entirety of the hedge funds we track, we can see that there lies a certain "tier" of fund managers who were dropping their entire stakes by the end of the fourth quarter. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital said goodbye to the largest stake of the 750 funds monitored by Insider Monkey, totaling an estimated $23.8 million in stock. Sander Gerber's fund, Hudson Bay Capital Management, also said goodbye to its stock, about $21.3 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 11 funds by the end of the fourth quarter.
Let's now take a look at hedge fund activity in other stocks similar to Syneos Health, Inc. (NASDAQ:SYNH). We will take a look at First Horizon National Corporation (NYSE:FHN), Donaldson Company, Inc. (NYSE:DCI), Redfin Corporation (NASDAQ:RDFN), SiteOne Landscape Supply, Inc. (NYSE:SITE), Royal Gold, Inc (NASDAQ:RGLD), Cleveland-Cliffs Inc (NYSE:CLF), and Lemonade, Inc. (NYSE:LMND). All of these stocks' market caps resemble SYNH's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FHN,30,403346,0 DCI,26,311896,-4 RDFN,21,209673,-7 SITE,17,72044,-11 RGLD,26,284227,-4 CLF,27,682934,5 LMND,13,211852,-2 Average,22.9,310853,-3.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.9 hedge funds with bullish positions and the average amount invested in these stocks was $311 million. That figure was $593 million in SYNH's case. First Horizon National Corporation (NYSE:FHN) is the most popular stock in this table. On the other hand Lemonade, Inc. (NYSE:LMND) is the least popular one with only 13 bullish hedge fund positions. Syneos Health, Inc. (NASDAQ:SYNH) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SYNH is 62.8. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th and still beat the market by 1.5 percentage points. Hedge funds were also right about betting on SYNH as the stock returned 16.2% since the end of Q4 (through 4/12) 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.