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NutriSystem Inc. (NTRI): Are Hedge Funds Right About This Stock?

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow over 700 of the best-performing investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is NutriSystem Inc. (NASDAQ:NTRI), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

NutriSystem Inc. (NASDAQ:NTRI) investors should be aware of an increase in hedge fund sentiment recently. NTRI was in 27 hedge funds’ portfolios at the end of the third quarter of 2015. There were 24 hedge funds in our database with NTRI positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Central Garden & Pet Co (NASDAQ:CENT), Astec Industries, Inc. (NASDAQ:ASTE), and DHX Media Ltd (USA) (NASDAQ:DHXM) to gather more data points.

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In the 21st century investor’s toolkit there are many methods stock market investors put to use to assess their stock investments. A duo of the most useful methods are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best investment managers can beat the market by a healthy margin (see the details here).

Now, we’re going to take a look at the key action regarding NutriSystem Inc. (NASDAQ:NTRI).

What have hedge funds been doing with NutriSystem Inc. (NASDAQ:NTRI)?

At Q3’s end, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 13% from one quarter earlier. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Jim Simons’ Renaissance Technologies holds the largest position in NutriSystem Inc. (NASDAQ:NTRI), valued at approximately $60.1 million and comprising 0.1% of its 13F portfolio. On Renaissance Technologies’s heels is Clifford Fox of Columbus Circle Investors, with an $18.3 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism consist of Philippe Laffont’s Coatue Management, Israel Englander’s Millennium Management and Robert B. Gillam’s McKinley Capital Management.

As one would reasonably expect, key money managers have jumped into NutriSystem Inc. (NASDAQ:NTRI) headfirst. Millennium Management, run by Israel Englander, assembled the biggest position in NutriSystem Inc. (NASDAQ:NTRI). Millennium Management had $11 million invested in the company at the end of the September. Joel Greenblatt’s Gotham Asset Management also made a $0.9 million investment in the stock during the quarter. The other funds with brand new NTRI positions are Paul Tudor Jones’s Tudor Investment Corp, Glenn Russell Dubin’s Highbridge Capital Management, and Peter Algert and Kevin Coldiron’s Algert Coldiron Investors.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as NutriSystem Inc. (NASDAQ:NTRI) but similarly valued. These stocks are Central Garden & Pet Co (NASDAQ:CENT), Astec Industries, Inc. (NASDAQ:ASTE), DHX Media Ltd (USA) (NASDAQ:DHXM), and Relypsa Inc (NASDAQ:RLYP). This group of stocks’ market caps are similar to NTRI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CENT 20 102629 4
ASTE 12 85829 -2
DHXM 5 140343 -1
RLYP 25 311230 -3

As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $160 million. That figure was $147 million in NTRI’s case, not a very good sign. Relypsa Inc (NASDAQ:RLYP) is the most popular stock in this table, whereas DHX Media Ltd (USA) (NASDAQ:DHXM) is the least popular one with only 5 bullish hedge fund positions. NutriSystem Inc. (NASDAQ:NTRI) is the superstar of this mix, having attracted the attention of 27 hedgies. Considering that investors are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

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