It is no surprise to anyone that obesity represents a major global health concern. According to fresh statistics, approximately 2.1 billion people, or nearly one-third of the world’s population, are obese or overweight. The obesity problem has been worsening in both emerging and developed countries and will continue to get even worse: more than 75% of people aged 15 and over are expected to be obese or overweight in Kuwait, Venezuela, Mexico, and the United States by 2018. This major health problem can lead to serious health complications, such as heart disease, diabetes, cancer, and other serious diseases. Hence, there appears to be an immense customer base for weight management companies, as the gravity of this life-threatening condition serves as a catalyst for future growth in this market. The U.S represents the largest weight management market in the world, accounting for roughly one-third of global sales. Nonetheless, there are a few factors that have been hindering growth in the weight management market, which includes natural weight loss practices, dwindling consumer confidence, and alternative prescription medicines. Nonetheless, given that more people are seeking to make major lifestyle changes to reduce their weight and improve their fitness, one can anticipate that the weight management market will continue to grow steadily in the foreseeable future. Having this in mind, the following article will lay out a list of five weight management stocks favored by the hedge fund industry, as well as discuss the recent performance of those companies. Some of the companies in question are not pure-play weight management companies, but do represent key players in the global weight management market.
At Insider Monkey, we track around 785 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details about our small-cap strategy).
#5 Medifast Inc. (NYSE:MED)
– Hedge Funds with Long Positions (as of December 31): 11
– Value of Hedge Funds’ Holdings (as of December 31): $99.76 Million
The number of hedge funds within the Insider Monkey database that were invested in Medifast Inc. (NYSE:MED) as of December 31 stood at 11, down from 14 on September 30. On the other hand, the value of their positions in the company climbed to $99.76 million from $95.10 million quarter-over-quarter, with those positions accounting for approximately 28% of the company’s outstanding common stock. The product portfolio of the Owings Mills-based weight-loss company includes weight loss, weight management, and healthy living meal replacements, snacks, hydration products and vitamins. Medifast generates revenue through four distribution channels that includes Medifast Direct, Take Shape For Life, Franchise Medifast Weight Control Centers, and Medifast Wholesale. The company’s Take Shape For Life represents the personal coaching division of Medifast, whose coaching network includes independent contractor health coaches trained to provide coaching and support to customers utilizing the Take Shape For Life platform. This sales channel, which accounts for 74.1% of total revenue, generated sales of $202.2 million in 2015, down from $206.7 million in 2014. The decrease was mainly driven by a smaller number of active Health Coaches and clients. The company’s 2015 total revenue was $272.77 million, down from $285.29 million in 2014 and $324.05 million in 2013. Shares of Medifast have declined by nearly 5% over the past 12 months and stand at a forward P/E multiple of 12.9, below the ratio of 16.7 for the S&P 500 Index. Jacob Gottlieb’s Visium Asset Management owns 1.35 million shares of Medifast Inc. (NYSE:MED) as of December 31.
