In this article we will check out the progression of hedge fund sentiment towards Lifevantage Corporation (NASDAQ:LFVN) 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.
Is LFVN a good stock to buy now? Lifevantage Corporation (NASDAQ:LFVN) was in 7 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 12. LFVN shareholders have witnessed a decrease in hedge fund sentiment recently. There were 9 hedge funds in our database with LFVN holdings at the end of June. Our calculations also showed that LFVN isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.
To most shareholders, hedge funds are assumed to be unimportant, outdated financial tools of the past. While there are over 8000 funds trading at the moment, We look at the bigwigs of this group, around 850 funds. Most estimates calculate that this group of people control most of the smart money’s total capital, and by following their inimitable picks, Insider Monkey has unearthed many investment strategies that have historically outrun Mr. Market. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. Now we’re going to take a look at the latest hedge fund action encompassing Lifevantage Corporation (NASDAQ:LFVN).
Hedge fund activity in Lifevantage Corporation (NASDAQ:LFVN)
At the end of September, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -22% from the previous quarter. On the other hand, there were a total of 8 hedge funds with a bullish position in LFVN a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Lifevantage Corporation (NASDAQ:LFVN), which was worth $14.3 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $1.5 million worth of shares. Winton Capital Management, Citadel Investment Group, and AQR 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 Winton Capital Management allocated the biggest weight to Lifevantage Corporation (NASDAQ:LFVN), around 0.02% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to LFVN.
Judging by the fact that Lifevantage Corporation (NASDAQ:LFVN) has experienced a decline in interest from the entirety of the hedge funds we track, logic holds that there lies a certain “tier” of fund managers who were dropping their full holdings in the third quarter. Interestingly, D. E. Shaw’s D E Shaw dropped the largest stake of the “upper crust” of funds watched by Insider Monkey, comprising an estimated $0.3 million in stock, and Chuck Royce’s Royce & Associates was right behind this move, as the fund sold off about $0 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 2 funds in the third quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Lifevantage Corporation (NASDAQ:LFVN) but similarly valued. These stocks are Cerecor Inc. (NASDAQ:CERC), Five Prime Therapeutics Inc (NASDAQ:FPRX), Sientra Inc (NASDAQ:SIEN), Acacia Research Corporation (NASDAQ:ACTG), Castlight Health Inc (NYSE:CSLT), PICO Holdings Inc (NASDAQ:PICO), and Stellus Capital Investment Corporation (NYSE:SCM). All of these stocks’ market caps are similar to LFVN’s market cap.
|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 11.6 hedge funds with bullish positions and the average amount invested in these stocks was $37 million. That figure was $18 million in LFVN’s case. Five Prime Therapeutics Inc (NASDAQ:FPRX) is the most popular stock in this table. On the other hand Stellus Capital Investment Corporation (NYSE:SCM) is the least popular one with only 6 bullish hedge fund positions. Lifevantage Corporation (NASDAQ:LFVN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for LFVN is 24.3. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd and surpassed the market again by 16 percentage points. Unfortunately LFVN wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); LFVN investors were disappointed as the stock returned -10.6% since the end of September (through 12/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.