Is The Time Right To Buy Nature’s Sunshine Prod. (NATR)? Wynnefield Buying More On Macroeconomic Weakness

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Nelson ObusWynnefield Capital recently upped its stake in Nature’s Sunshine Prod. (NASDAQ:NATR) by about 21,300 shares to 1.97 million shares according to a filing with the SEC. The holding comprises 626,700 shares that are directly owned by the fund and 1.34 million shares held indirectly. The additional stake was acquired through multiple transactions that cost between $12.45 and $12.50 per share. Wynnefield owns over 10% of Nature’s Sunshine’s outstanding common stock.

Nelson Obus

At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically delivered a monthly alpha of six basis points, though these stocks underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning over 144% and beating the market by more than 84 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise rather than large-cap stocks.

Obus launched Wynnefield in 1992 with the aim of focusing on small-cap companies. Prior to that, he was Research Director of Schafer Capital Management for two years. Obus also worked at Lazard Freres & Co. for eight years as an analyst, account executive and research director. Assets under the fund’s management currently stand at $309 million, while the market value of Wynnefield’s public equity portfolio stood at $226.25 million at the end of March. Besides Nature’s Sunshine Prod. (NASDAQ:NATR), the fund’s top public equity holdings include Landec Corporation (NASDAQ:LNDC) and Breeze-Eastern Corp (NYSEMKT:BZC). The consumer staples and technology sectors each represented 24% of Wynnefield’s public portfolio value.

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Among the hedge funds that we track, the interest in Nature’s Sunshine Prod. (NASDAQ:NATR) has declined over the quarter, as only eight firms had invested a total of $83.88 million in the company at the end of March, as compared to 11 firms with $94.56 million in the company’s stock at the end of the previous quarter. Willem Mesdag‘s Red Mountain Capital is the largest stockholder among them, holding about 2.41 million shares valued at $31.59 million. The stock has slid by more than 11% so far this year. In its financial results for the first quarter, although the company’s EPS of $0.22 beat estimates by $0.08, revenues of $83.9 million came in $9.8 million lighter than expected. The $248.66 million natural health and wellness company was affected by unfavorable currency fluctuations in Russia, and Central and Eastern Europe. During the quarter, Nature’s Sunshine Prod. (NASDAQ:NATR) increased its footprint in China through a joint venture with Fosun Pharma.

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