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Is Systemax Inc. (SYX) Going to Burn These Hedge Funds?

Al Green

While the market driven by short-term sentiment influenced by uncertainty regarding the future of the interest rate environment in the US, declining oil prices and the trade war with China, many smart money investors are keeping their optimism regarding the current bull run, while still hedging many of their long positions. However, as we know, big investors usually buy stocks with strong fundamentals, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Systemax Inc. (NYSE:SYX).

Is Systemax Inc. (NYSE:SYX) a cheap investment today? Prominent investors are in a bullish mood. The number of long hedge fund positions went up by 1 recently. Our calculations also showed that SYX isn't among the 30 most popular stocks among hedge funds. SYX was in 14 hedge funds' portfolios at the end of the third quarter of 2018. There were 13 hedge funds in our database with SYX positions at the end of the previous quarter.

In the 21st century investor’s toolkit there are a large number of metrics stock market investors have at their disposal to analyze publicly traded companies. Some of the most underrated metrics are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the elite investment managers can outclass the market by a superb amount (see the details here).

[caption id="attachment_30621" align="aligncenter" width="487"] Cliff Asness of AQR Capital Management[/caption]

AQR CAPITAL MANAGEMENT

We're going to review the recent hedge fund action surrounding Systemax Inc. (NYSE:SYX).

Hedge fund activity in Systemax Inc. (NYSE:SYX)

At Q3's end, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from one quarter earlier. By comparison, 10 hedge funds held shares or bullish call options in SYX heading into this year. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.


No of Hedge Funds with SYX Positions


Among these funds, Royce & Associates held the most valuable stake in Systemax Inc. (NYSE:SYX), which was worth $6.4 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $6.1 million worth of shares. Moreover, Renaissance Technologies, Portolan Capital Management, and Millennium Management were also bullish on Systemax Inc. (NYSE:SYX), allocating a large percentage of their portfolios to this stock.

As aggregate interest increased, some big names were breaking ground themselves. GLG Partners, managed by Noam Gottesman, created the most outsized position in Systemax Inc. (NYSE:SYX). GLG Partners had $0.3 million invested in the company at the end of the quarter. Paul Tudor Jones's Tudor Investment Corp also made a $0.2 million investment in the stock during the quarter.

Let's also examine hedge fund activity in other stocks similar to Systemax Inc. (NYSE:SYX). These stocks are Astronics Corporation (NASDAQ:ATRO), Atkore International Group Inc. (NYSE:ATKR), First Trust Developed Markets Ex-US AlphaDEX Fund (NASDAQ:FDT), and Materion Corp (NYSE:MTRN). This group of stocks' market values resemble SYX's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ATRO,10,75456,2 ATKR,24,151269,3 FDT,1,7076,-1 MTRN,13,98223,-2 Average,12,83006,0.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $83 million. That figure was $27 million in SYX's case. Atkore International Group Inc. (NYSE:ATKR) is the most popular stock in this table. On the other hand First Trust Developed Markets Ex-US AlphaDEX Fund (NASDAQ:FDT) is the least popular one with only 1 bullish hedge fund positions. Systemax Inc. (NYSE:SYX) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. In this regard ATKR might be a better candidate to consider a long position.

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

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