What Makes TD Synnex (SNX) an Attractive Opportunity?

Investment management company First Pacific Advisors recently released its “FPA Queens Road Small Cap Value Fund” fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. The Fund returned -0.36% in Q4 2025, compared to the Russell 2000 Value Index’s 3.26%. In 2025, the Fund has returned 13.36% compared to 12.59% gain for the Index. The Fund outperformed in the first half of 2025, when markets were weak and volatile. However, in the second half of 2025, markets favored speculative and low-quality stocks, leading to the Fund’s underperformance. The portfolio is designed to protect clients from market drawdowns by focusing on quality and value. Please review the Fund’s top five holdings to gain insights into their key selections for 2025.

In its fourth-quarter 2025 investor letter, FPA Queens Road Small Cap Value Fund highlighted stocks like TD SYNNEX Corporation (NYSE:SNX). TD SYNNEX Corporation (NYSE:SNX) is a leading distributor for the information technology (IT) ecosystem. The one-month return of TD SYNNEX Corporation (NYSE:SNX) was 4.94%, and its shares gained 8.99% of their value over the last 52 weeks. On February 12, 2026, TD SYNNEX Corporation (NYSE:SNX) stock closed at $157.41 per share, with a market capitalization of $12.69 billion.

FPA Queens Road Small Cap Value Fund stated the following regarding TD SYNNEX Corporation (NYSE:SNX) in its fourth quarter 2025 investor letter:

"Below are three examples where, we believe, an uncrowded arena has created opportunity. All three are stocks that we have owned for a long time and that have performed well for the Fund. Their businesses haven’t changed much, but their valuations (market multiples) have come down with the ebbing small cap tide. is roughly: The likely explanation As small (and SMID) cap strategies see outflows, there isn’t another natural cohort of investors who want to buy high quality but boring small businesses at reasonable valuations. While no one was paying attention, earnings grew faster than the stock prices appreciated, pushing down their multiples and pushing up expected returns. We think all three are attractive opportunities at the current prices.

TD SYNNEX Corporation (NYSE:SNX) is the world’s largest IT distributor. 14 Synnex in 2021 – The company was formed by the merger of Tech Data and we first bought TD in 2010 (it was taken private in 2020) and SNX in 2012. distribution meant delivering 20 years ago, IT PCs, servers and networking equipment from warehouses to customers. But SNX used its position as a middleman to add value to both sides of the equation, acting as an outsourced sales force for its OEM suppliers while providing bundling, consultation and other value added services to its customers. SNX evolved with the times selling increasing amounts of software, security, cloud and now AI products. Still, this is a relatively old school, low margin / high volume business with a large element of working capital management.

What is interesting to us is that SNX trades at roughly 10x forward earnings, towards the low end of its historical range (blue line on the chart below). The business continues to evolve but the basics are roughly the same as they were ten years ago. If anything , the business has gotten incrementally better – higher margins, higher returns on capital, more scale, consolidation among the large players and more international opportunity. Covid era excess spending, recent results have been strong. 15 After digesting And the company has a long history of growth and strong returns for shareholders. But there’s no near term event or catalyst and our best guess is that SNX suffers from the limited constituency of long term owners in the SMID space. (SNX has a $12B market cap – willing to hold stocks that successfully graduate out of small cap even if we only buy new holdings that are small.)"

TD SYNNEX Corporation (NYSE:SNX) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 35 hedge fund portfolios held TD SYNNEX Corporation (NYSE:SNX) at the end of the third quarter, compared to 36 in the previous quarter. While we acknowledge the potential of TD SYNNEX Corporation (NYSE:SNX) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered TD SYNNEX Corporation (NYSE:SNX) and shared a list of best dividend stocks to invest in. In addition, please check out our hedge fund investor letters Q4 2025 page for more investor letters from hedge funds and other leading investors.

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