In this article we will check out the progression of hedge fund sentiment towards Natural Health Trends Corp. (NASDAQ:NHTC) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Natural Health Trends Corp. (NASDAQ:NHTC) was in 4 hedge funds’ portfolios at the end of March. NHTC investors should be aware of a decrease in support from the world’s most elite money managers lately. There were 5 hedge funds in our database with NHTC holdings at the end of the previous quarter. Our calculations also showed that NHTC 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.
In the eyes of most traders, hedge funds are viewed as underperforming, old investment vehicles of the past. While there are greater than 8000 funds with their doors open at present, Our researchers hone in on the masters of this club, around 850 funds. These hedge fund managers preside over the majority of the smart money’s total asset base, and by monitoring their matchless stock picks, Insider Monkey has come up with a few investment strategies that have historically surpassed the market. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. 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 let’s analyze the fresh hedge fund action surrounding Natural Health Trends Corp. (NASDAQ:NHTC).
Hedge fund activity in Natural Health Trends Corp. (NASDAQ:NHTC)
Heading into the second quarter of 2020, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -20% from the fourth quarter of 2019. On the other hand, there were a total of 12 hedge funds with a bullish position in NHTC a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Renaissance Technologies, holds the number one position in Natural Health Trends Corp. (NASDAQ:NHTC). Renaissance Technologies has a $2.9 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is D E Shaw, managed by D. E. Shaw, which holds a $0.4 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining professional money managers that hold long positions encompass John Overdeck and David Siegel’s Two Sigma Advisors, Israel Englander’s Millennium Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Renaissance Technologies allocated the biggest weight to Natural Health Trends Corp. (NASDAQ:NHTC), around 0.0028% of its 13F portfolio. Two Sigma Advisors is also relatively very bullish on the stock, setting aside 0.0007 percent of its 13F equity portfolio to NHTC.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Prescott Group Capital Management. 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 none of the 750+ hedge funds tracked by Insider Monkey identified NHTC as a viable investment and initiated a position in the stock.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Natural Health Trends Corp. (NASDAQ:NHTC) but similarly valued. These stocks are Ark Restaurants Corp. (NASDAQ:ARKR), A. H. Belo Corporation (NYSE:AHC), Red Lion Hotels Corporation (NYSE:RLH), and Bioanalytical Systems, Inc. (NASDAQ:BASI). This group of stocks’ market valuations match NHTC’s market valuation.
|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 4.75 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $4 million in NHTC’s case. Red Lion Hotels Corporation (NYSE:RLH) 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. Natural Health Trends Corp. (NASDAQ:NHTC) is not the least popular stock in this group but hedge fund interest is still below 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 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on NHTC as the stock returned 130.1% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.