Is Nu Skin Enterprises, Inc. (NYSE:NUS) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Is NUS a good stock to buy now? The smart money was becoming less confident. The number of bullish hedge fund bets went down by 3 in recent months. Nu Skin Enterprises, Inc. (NYSE:NUS) was in 22 hedge funds’ portfolios at the end of September. The all time high for this statistic is 29. Our calculations also showed that NUS 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.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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. With all of this in mind let’s take a look at the new hedge fund action encompassing Nu Skin Enterprises, Inc. (NYSE:NUS).
Do Hedge Funds Think NUS Is A Good Stock To Buy Now?
At Q3’s end, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of -12% from the second quarter of 2020. On the other hand, there were a total of 23 hedge funds with a bullish position in NUS a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Nu Skin Enterprises, Inc. (NYSE:NUS), with a stake worth $118 million reported as of the end of September. Trailing Renaissance Technologies was AQR Capital Management, which amassed a stake valued at $53.8 million. Arrowstreet Capital, Intrinsic Edge Capital, and Two Sigma Advisors 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 3.65% of its 13F portfolio. Portolan Capital Management is also relatively very bullish on the stock, designating 1.41 percent of its 13F equity portfolio to NUS.
Seeing as Nu Skin Enterprises, Inc. (NYSE:NUS) has faced a decline in interest from the smart money, logic holds that there lies a certain “tier” of funds that decided to sell off their entire stakes by the end of the third quarter. Interestingly, Chuck Royce’s Royce & Associates said goodbye to the largest stake of the 750 funds watched by Insider Monkey, worth close to $2.7 million in stock. Brandon Haley’s fund, Holocene Advisors, also cut its stock, about $1.4 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 3 funds by the end of the third quarter.
Let’s now review hedge fund activity in other stocks similar to Nu Skin Enterprises, Inc. (NYSE:NUS). We will take a look at Tegna Inc (NYSE:TGNA), Pacira Biosciences Inc (NASDAQ:PCRX), Cleveland-Cliffs Inc (NYSE:CLF), Antero Midstream Corp (NYSE:AM), BlackBerry Limited (NYSE:BB), Burning Rock Biotech Limited (NASDAQ:BNR), and Avnet, Inc. (NYSE:AVT). This group of stocks’ market values are closest to 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 22.7 hedge funds with bullish positions and the average amount invested in these stocks was $334 million. That figure was $315 million in NUS’s case. Avnet, Inc. (NYSE:AVT) is the most popular stock in this table. On the other hand Burning Rock Biotech Limited (NASDAQ:BNR) is the least popular one with only 11 bullish hedge fund positions. Nu Skin Enterprises, Inc. (NYSE:NUS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NUS is 52.3. 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 30.7% in 2020 through December 14th and surpassed the market again by 15.8 percentage points. Unfortunately NUS wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); NUS investors were disappointed as the stock returned 2.5% since the end of September (through 12/14) 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.