At Insider Monkey, we pore over the filings of nearly 866 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of March 31st. In this article, we will use that wealth of knowledge to determine whether or not Sypris Solutions, Inc. (NASDAQ:SYPR) makes for a good investment right now.
Sypris Solutions, Inc. (NASDAQ:SYPR) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 3 hedge funds' portfolios at the end of the first quarter of 2021. Our calculations also showed that SYPR isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as aTyr Pharma Inc. (NASDAQ:LIFE), Achieve Life Sciences, Inc. (NASDAQ:ACHV), and Jerash Holdings (US), Inc. (NASDAQ:JRSH) to gather more data points.
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 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
David Siegel of Two Sigma Advisors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $26 biotech stock for $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 let's go over the latest hedge fund action encompassing Sypris Solutions, Inc. (NASDAQ:SYPR).
Do Hedge Funds Think SYPR Is A Good Stock To Buy Now?
At Q1's end, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SYPR over the last 23 quarters. With hedgies' sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Sypris Solutions, Inc. (NASDAQ:SYPR), with a stake worth $3.1 million reported as of the end of March. Trailing Renaissance Technologies was Citadel Investment Group, which amassed a stake valued at $0.2 million. Two Sigma Advisors was 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 Renaissance Technologies allocated the biggest weight to Sypris Solutions, Inc. (NASDAQ:SYPR), around 0.0039% of its 13F portfolio. Two Sigma Advisors is also relatively very bullish on the stock, earmarking 0.0002 percent of its 13F equity portfolio to SYPR.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: 999. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Citadel Investment Group).
Let's go over hedge fund activity in other stocks similar to Sypris Solutions, Inc. (NASDAQ:SYPR). We will take a look at aTyr Pharma Inc. (NASDAQ:LIFE), Achieve Life Sciences, Inc. (NASDAQ:ACHV), Jerash Holdings (US), Inc. (NASDAQ:JRSH), Ark Restaurants Corp. (NASDAQ:ARKR), Chembio Diagnostics Inc (NASDAQ:CEMI), Vertex Energy Inc (NASDAQ:VTNR), and ImmuCell Corporation (NASDAQ:ICCC). This group of stocks' market values are similar to SYPR's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LIFE,6,6962,2 ACHV,3,3690,0 JRSH,2,1527,0 ARKR,1,1213,0 CEMI,7,3452,1 VTNR,5,4142,0 ICCC,2,1921,0 Average,3.7,3272,0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 3.7 hedge funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $3 million in SYPR's case. Chembio Diagnostics Inc (NASDAQ:CEMI) is the most popular stock in this table. On the other hand Ark Restaurants Corp. (NASDAQ:ARKR) is the least popular one with only 1 bullish hedge fund positions. Sypris Solutions, Inc. (NASDAQ:SYPR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SYPR is 51.7. 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. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and surpassed the market again by 3.3 percentage points. Unfortunately SYPR wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); SYPR investors were disappointed as the stock returned 5.7% since the end of March (through 6/11) 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 in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.