USANA Health Sciences, Inc. (USNA): Hedge Funds Are Snapping Up

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 823 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 June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. 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) was in 19 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 22. USNA investors should pay attention to an increase in hedge fund interest of late. There were 13 hedge funds in our database with USNA holdings at the end of March. Our calculations also showed that USNA isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.

In the eyes of most traders, hedge funds are viewed as underperforming, old investment tools of the past. While there are greater than 8000 funds with their doors open today, We look at the leaders of this group, around 850 funds. It is estimated that this group of investors have their hands on bulk of the hedge fund industry’s total capital, and by monitoring their best picks, Insider Monkey has discovered a number of investment strategies that have historically surpassed the market. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Peter Rathjens Arrowstreet Capital 394

Peter Rathjens of Arrowstreet Capital

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 are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world 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 to get excerpts of these letters in your inbox. With all of this in mind we’re going to take a gander at the fresh hedge fund action encompassing USANA Health Sciences, Inc. (NYSE:USNA).

What have hedge funds been doing with USANA Health Sciences, Inc. (NYSE:USNA)?

At the end of June, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 46% from one quarter earlier. By comparison, 13 hedge funds held shares or bullish call options in USNA a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in USANA Health Sciences, Inc. (NYSE:USNA) was held by Renaissance Technologies, which reported holding $129.9 million worth of stock at the end of September. It was followed by D E Shaw with a $19.6 million position. Other investors bullish on the company included Arrowstreet Capital, Millennium Management, and GLG Partners. In terms of the portfolio weights assigned to each position Renaissance Technologies allocated the biggest weight to USANA Health Sciences, Inc. (NYSE:USNA), around 0.11% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, earmarking 0.1 percent of its 13F equity portfolio to USNA.

Consequently, key hedge funds were leading the bulls’ herd. Engineers Gate Manager, managed by Greg Eisner, created the most valuable position in USANA Health Sciences, Inc. (NYSE:USNA). Engineers Gate Manager had $1.6 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also initiated a $1.5 million position during the quarter. The other funds with new positions in the stock are Donald Sussman’s Paloma Partners, Peter Muller’s PDT Partners, and Parvinder Thiara’s Athanor Capital.

Let’s check out hedge fund activity in other stocks similar to USANA Health Sciences, Inc. (NYSE:USNA). These stocks are Adient plc (NYSE:ADNT), Adaptimmune Therapeutics plc (NASDAQ:ADAP), NIC Inc. (NASDAQ:EGOV), Holly Energy Partners, L.P. (NYSE:HEP), Magnolia Oil & Gas Corporation (NYSE:MGY), First Midwest Bancorp Inc (NASDAQ:FMBI), and Arconic Corporation (NYSE:ARNC). This group of stocks’ market valuations resemble USNA’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ADNT 35 341229 3
ADAP 19 831196 8
EGOV 16 108964 -1
HEP 2 2399 -4
MGY 20 86261 0
FMBI 11 39364 0
ARNC 16 478899 -9
Average 17 269759 -0.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $270 million. That figure was $214 million in USNA’s case. Adient plc (NYSE:ADNT) is the most popular stock in this table. On the other hand Holly Energy Partners, L.P. (NYSE:HEP) is the least popular one with only 2 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 overall hedge fund sentiment score for USNA is 61.7. 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 positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 24.8% in 2020 through the end of September and beat the market by 19.3 percentage points. Unfortunately USNA wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on USNA were disappointed as the stock returned 0.3% in Q3 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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