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Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts, usually don't make them change their opinion towards a company. This time it may be different. During the fourth quarter of 2018 we observed increased volatility and small-cap stocks underperformed the market. Things completely reversed during the first quarter. Hedge fund investor letters indicated that they are cutting their overall exposure, closing out some position and doubling down on others. Let’s take a look at the hedge fund sentiment towards Synchrony Financial (NYSE:SYF) to find out whether it was one of their high conviction long-term ideas.
Synchrony Financial (NYSE:SYF) has experienced an increase in hedge fund sentiment recently. Our calculations also showed that syf isn't among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let's take a look at the new hedge fund action encompassing Synchrony Financial (NYSE:SYF).
How are hedge funds trading Synchrony Financial (NYSE:SYF)?
Heading into the second quarter of 2019, a total of 45 of the hedge funds tracked by Insider Monkey were long this stock, a change of 13% from one quarter earlier. On the other hand, there were a total of 39 hedge funds with a bullish position in SYF a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Berkshire Hathaway was the largest shareholder of Synchrony Financial (NYSE:SYF), with a stake worth $663.6 million reported as of the end of March. Trailing Berkshire Hathaway was Baupost Group, which amassed a stake valued at $454.9 million. AQR Capital Management, Southpoint Capital Advisors, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.