How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don't always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Syros Pharmaceuticals, Inc. (NASDAQ:SYRS).
Is SYRS a good stock to buy now? Syros Pharmaceuticals, Inc. (NASDAQ:SYRS) has seen a decrease in enthusiasm from smart money recently. Syros Pharmaceuticals, Inc. (NASDAQ:SYRS) was in 13 hedge funds' portfolios at the end of September. The all time high for this statistic is 15. There were 15 hedge funds in our database with SYRS positions at the end of the second quarter. Our calculations also showed that SYRS isn't among the 30 most popular stocks among hedge funds (click for Q3 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.
At the moment there are a lot of formulas shareholders put to use to grade their stock investments. A duo of the most innovative formulas are hedge fund and insider trading moves. We have shown that, historically, those who follow the top picks of the top investment managers can trounce the S&P 500 by a very impressive margin (see the details here).
Steven Cohen
Steven Cohen of Point72 Asset Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 take a look at the key hedge fund action regarding Syros Pharmaceuticals, Inc. (NASDAQ:SYRS).
Do Hedge Funds Think SYRS Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards SYRS over the last 21 quarters. With the smart money's sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Samsara BioCapital, managed by Srini Akkaraju and Michael Dybbs, holds the biggest position in Syros Pharmaceuticals, Inc. (NASDAQ:SYRS). Samsara BioCapital has a $11.6 million position in the stock, comprising 3.2% of its 13F portfolio. The second most bullish fund manager is Baker Bros. Advisors, led by Julian Baker and Felix Baker, holding a $6.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism contain Steve Cohen's Point72 Asset Management, George McCabe's Portolan Capital Management and Jeremy Green's Redmile Group. In terms of the portfolio weights assigned to each position Samsara BioCapital allocated the biggest weight to Syros Pharmaceuticals, Inc. (NASDAQ:SYRS), around 3.24% of its 13F portfolio. Portolan Capital Management is also relatively very bullish on the stock, earmarking 0.45 percent of its 13F equity portfolio to SYRS.
Judging by the fact that Syros Pharmaceuticals, Inc. (NASDAQ:SYRS) has experienced bearish sentiment from the smart money, it's safe to say that there were a few money managers that elected to cut their full holdings heading into Q4. Interestingly, Renaissance Technologies dropped the largest investment of the 750 funds monitored by Insider Monkey, totaling close to $0.6 million in stock. Paul Marshall and Ian Wace's fund, Marshall Wace LLP, also dumped its stock, about $0.3 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 2 funds heading into Q4.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Syros Pharmaceuticals, Inc. (NASDAQ:SYRS) but similarly valued. These stocks are Brightcove Inc (NASDAQ:BCOV), The Lovesac Company (NASDAQ:LOVE), AnaptysBio, Inc. (NASDAQ:ANAB), Allied Motion Technologies, Inc. (NASDAQ:AMOT), Yunji Inc. (NASDAQ:YJ), TFF Pharmaceuticals, Inc. (NASDAQ:TFFP), and Waterstone Financial, Inc. (NASDAQ:WSBF). This group of stocks' market caps resemble SYRS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BCOV,18,158080,0 LOVE,9,35135,-2 ANAB,24,241528,-2 AMOT,12,49767,-1 YJ,4,1496,0 TFFP,6,66934,2 WSBF,10,68922,-4 Average,11.9,88837,-1 [/table]
As you can see these stocks had an average of 11.9 hedge funds with bullish positions and the average amount invested in these stocks was $89 million. That figure was $37 million in SYRS's case. AnaptysBio, Inc. (NASDAQ:ANAB) is the most popular stock in this table. On the other hand Yunji Inc. (NASDAQ:YJ) is the least popular one with only 4 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 overall hedge fund sentiment score for SYRS is 51.5. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on SYRS as the stock returned 20.9% since the end of Q3 (through 12/8) 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.
