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Is USANA Health Sciences, Inc. (USNA) A Good Stock To Buy?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. We are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article we look at how hedge funds traded USANA Health Sciences, Inc. (NYSE:USNA) and determine whether the smart money was really smart about this stock.

USANA Health Sciences, Inc. (NYSE:USNA) shareholders have witnessed an increase in hedge fund interest recently. USNA was in 13 hedge funds’ portfolios at the end of March. There were 12 hedge funds in our database with USNA holdings at the end of the previous quarter. Our calculations also showed that USNA 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

TUDOR INVESTMENT CORP

Paul Tudor Jones of Tudor Investment Corp

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, we take a look at lists like the 8 states that allow euthanasia to identify emerging trends that are likely to lead to 1000% gains in the coming years. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to go over the latest hedge fund action surrounding USANA Health Sciences, Inc. (NYSE:USNA).

How have hedgies been trading USANA Health Sciences, Inc. (NYSE:USNA)?

Heading into the second quarter of 2020, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in USNA over the last 18 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

More specifically, Renaissance Technologies was the largest shareholder of USANA Health Sciences, Inc. (NYSE:USNA), with a stake worth $91.4 million reported as of the end of September. Trailing Renaissance Technologies was D E Shaw, which amassed a stake valued at $17.7 million. GLG Partners, Citadel Investment Group, and Winton 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 Renaissance Technologies allocated the biggest weight to USANA Health Sciences, Inc. (NYSE:USNA), around 0.09% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, designating 0.07 percent of its 13F equity portfolio to USNA.

As industrywide interest jumped, key hedge funds have jumped into USANA Health Sciences, Inc. (NYSE:USNA) headfirst. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, initiated the largest position in USANA Health Sciences, Inc. (NYSE:USNA). Arrowstreet Capital had $2.2 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $1.2 million position during the quarter. The other funds with brand new USNA positions are Paul Tudor Jones’s Tudor Investment Corp and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as USANA Health Sciences, Inc. (NYSE:USNA) but similarly valued. We will take a look at Amerisafe, Inc. (NASDAQ:AMSF), Zealand Pharma A/S (NASDAQ:ZEAL), Luminex Corporation (NASDAQ:LMNX), and Wolverine World Wide, Inc. (NYSE:WWW). All of these stocks’ market caps are closest to USNA’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AMSF 9 35964 -1
ZEAL 3 27186 -1
LMNX 15 232969 -2
WWW 22 84713 -1
Average 12.25 95208 -1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $95 million. That figure was $133 million in USNA’s case. Wolverine World Wide, Inc. (NYSE:WWW) is the most popular stock in this table. On the other hand Zealand Pharma A/S (NASDAQ:ZEAL) is the least popular one with only 3 bullish hedge fund positions. USANA Health Sciences, Inc. (NYSE:USNA) is not the most popular stock in this group but hedge fund interest is still above 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 13.3% in 2020 through June 25th but still beat the market by 16.8 percentage points. Hedge funds were also right about betting on USNA, though not to the same extent, as the stock returned 20.8% during the first two months and twenty five days of the second quarter and outperformed the market as well.

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