We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Nu Skin Enterprises, Inc. (NYSE:NUS) based on that data.
Is Nu Skin Enterprises, Inc. (NYSE:NUS) the right investment to pursue these days? Hedge funds are turning less bullish. The number of bullish hedge fund positions shrunk by 4 in recent months. Our calculations also showed that NUS isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.
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 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a peek at the recent hedge fund action encompassing Nu Skin Enterprises, Inc. (NYSE:NUS).
How have hedgies been trading Nu Skin Enterprises, Inc. (NYSE:NUS)?
Heading into the second quarter of 2020, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -18% from the previous quarter. By comparison, 23 hedge funds held shares or bullish call options in NUS a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, AQR Capital Management held the most valuable stake in Nu Skin Enterprises, Inc. (NYSE:NUS), which was worth $38.7 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $22.2 million worth of shares. D E Shaw, Two Sigma Advisors, and Prentice Capital Management were 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 Prentice Capital Management allocated the biggest weight to Nu Skin Enterprises, Inc. (NYSE:NUS), around 2.72% of its 13F portfolio. Prescott Group Capital Management is also relatively very bullish on the stock, earmarking 2.07 percent of its 13F equity portfolio to NUS.
Due to the fact that Nu Skin Enterprises, Inc. (NYSE:NUS) has experienced bearish sentiment from the smart money, logic holds that there were a few fund managers that slashed their positions entirely by the end of the first quarter. Intriguingly, George McCabe’s Portolan Capital Management cut the biggest investment of the “upper crust” of funds watched by Insider Monkey, valued at an estimated $1.8 million in stock. Steve Cohen’s fund, Point72 Asset Management, also cut its stock, about $0.9 million worth. These transactions are important to note, as total hedge fund interest fell by 4 funds by the end of the first quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Nu Skin Enterprises, Inc. (NYSE:NUS) but similarly valued. We will take a look at SPX FLOW, Inc. (NASDAQ:FLOW), Sunrun Inc (NASDAQ:RUN), SciPlay Corporation (NASDAQ:SCPL), and 360 Finance, Inc. (NASDAQ:QFIN). This group of stocks’ market values match NUS’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.75 hedge funds with bullish positions and the average amount invested in these stocks was $144 million. That figure was $111 million in NUS’s case. Sunrun Inc (NASDAQ:RUN) is the most popular stock in this table. On the other hand 360 Finance, Inc. (NASDAQ:QFIN) is the least popular one with only 3 bullish hedge fund positions. Nu Skin Enterprises, Inc. (NYSE:NUS) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd but still beat the market by 15.9 percentage points. Hedge funds were also right about betting on NUS as the stock returned 77.8% in Q2 (through June 22nd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.