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Hedge Funds Sentiment Turns On Nu Skin Enterprises, Inc. (NUS)

We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Nu Skin Enterprises, Inc. (NYSE:NUS) and determine whether hedge funds skillfully traded this stock.

Nu Skin Enterprises, Inc. (NYSE:NUS) was in 25 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 29. NUS investors should be aware of an increase in hedge fund sentiment of late. There were 18 hedge funds in our database with NUS holdings at the end of March. Our calculations also showed that NUS isn’t among the 30 most popular stocks among hedge funds (click for Q2 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 today’s marketplace there are a lot of metrics stock traders employ to analyze publicly traded companies. A pair of the less utilized metrics are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the top investment managers can beat the market by a healthy amount (see the details here).

AQR CAPITAL MANAGEMENT

Cliff Asness of AQR Capital Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox. With all of this in mind we’re going to review the fresh hedge fund action surrounding Nu Skin Enterprises, Inc. (NYSE:NUS).

What does smart money think about Nu Skin Enterprises, Inc. (NYSE:NUS)?

At the end of the second quarter, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of 39% from the first quarter of 2020. On the other hand, there were a total of 20 hedge funds with a bullish position in NUS a year ago. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).

More specifically, Renaissance Technologies was the largest shareholder of Nu Skin Enterprises, Inc. (NYSE:NUS), with a stake worth $67.9 million reported as of the end of September. Trailing Renaissance Technologies was AQR Capital Management, which amassed a stake valued at $63.4 million. Arrowstreet Capital, Two Sigma Advisors, and Millennium 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 Prescott Group Capital Management allocated the biggest weight to Nu Skin Enterprises, Inc. (NYSE:NUS), around 3.1% of its 13F portfolio. Intrinsic Edge Capital is also relatively very bullish on the stock, dishing out 0.95 percent of its 13F equity portfolio to NUS.

As aggregate interest increased, key money managers have jumped into Nu Skin Enterprises, Inc. (NYSE:NUS) headfirst. Intrinsic Edge Capital, managed by Mark Coe, created the most valuable position in Nu Skin Enterprises, Inc. (NYSE:NUS). Intrinsic Edge Capital had $10.3 million invested in the company at the end of the quarter. George McCabe’s Portolan Capital Management also made a $6.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Noam Gottesman’s GLG Partners, Greg Eisner’s Engineers Gate Manager, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.

Let’s go over 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 PJT Partners Inc (NYSE:PJT), Spectrum Brands Holdings, Inc. (NYSE:SPB), Principia Biopharma Inc. (NASDAQ:PRNB), AssetMark Financial Holdings, Inc. (NYSE:AMK), Cimpress plc (NASDAQ:CMPR), Select Medical Holdings Corporation (NYSE:SEM), and Yext, Inc. (NYSE:YEXT). All of these stocks’ market caps match NUS’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PJT 21 105078 -1
SPB 26 249356 2
PRNB 26 654270 5
AMK 6 29052 2
CMPR 25 269870 6
SEM 22 93345 4
YEXT 10 31408 1
Average 19.4 204626 2.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.4 hedge funds with bullish positions and the average amount invested in these stocks was $205 million. That figure was $240 million in NUS’s case. Spectrum Brands Holdings, Inc. (NYSE:SPB) is the most popular stock in this table. On the other hand AssetMark Financial Holdings, Inc. (NYSE:AMK) is the least popular one with only 6 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 overall hedge fund sentiment score for NUS is 83.4. 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. 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 21.3% in 2020 through September 25th and still beat the market by 17.7 percentage points. Hedge funds were also right about betting on NUS as the stock returned 34.1% during Q3 (through September 25th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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