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 nearly 817 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Nature's Sunshine Products Inc (NASDAQ:NATR), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is NATR a good stock to buy now? Nature's Sunshine Products Inc (NASDAQ:NATR) was in 9 hedge funds' portfolios at the end of September. The all time high for this statistic is 8. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. NATR investors should pay attention to an increase in support from the world's most elite money managers lately. There were 8 hedge funds in our database with NATR positions at the end of the second quarter. Our calculations also showed that NATR 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.
Nelson Obus of Wynnefield 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 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. Keeping this in mind let's take a look at the new hedge fund action encompassing Nature's Sunshine Products Inc (NASDAQ:NATR).
Do Hedge Funds Think NATR Is A Good Stock To Buy Now?
At third quarter's end, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from one quarter earlier. On the other hand, there were a total of 6 hedge funds with a bullish position in NATR a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Red Mountain Capital held the most valuable stake in Nature's Sunshine Products Inc (NASDAQ:NATR), which was worth $29.2 million at the end of the third quarter. On the second spot was Wynnefield Capital which amassed $27.8 million worth of shares. Prescott Group Capital Management, Renaissance Technologies, and Nantahala 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 Red Mountain Capital allocated the biggest weight to Nature's Sunshine Products Inc (NASDAQ:NATR), around 52.72% of its 13F portfolio. Wynnefield Capital is also relatively very bullish on the stock, earmarking 17.28 percent of its 13F equity portfolio to NATR.
As one would reasonably expect, key money managers were breaking ground themselves. Bailard Inc, managed by Thomas Bailard, established the most outsized position in Nature's Sunshine Products Inc (NASDAQ:NATR). Bailard Inc had $0.2 million invested in the company at the end of the quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Nature's Sunshine Products Inc (NASDAQ:NATR) but similarly valued. We will take a look at Teekay Corporation (NYSE:TK), KalVista Pharmaceuticals, Inc. (NASDAQ:KALV), Genfit SA (NASDAQ:GNFT), Galera Therapeutics, Inc. (NASDAQ:GRTX), Peabody Energy Corporation (NYSE:BTU), South Plains Financial, Inc. (NASDAQ:SPFI), and Red Violet, Inc. (NASDAQ:RDVT). This group of stocks' market values match NATR's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TK,8,11158,-6 KALV,15,66712,-3 GNFT,1,150,-1 GRTX,7,33786,0 BTU,20,99928,-3 SPFI,2,3871,1 RDVT,2,5446,-3 Average,7.9,31579,-2.1 [/table]
As you can see these stocks had an average of 7.9 hedge funds with bullish positions and the average amount invested in these stocks was $32 million. That figure was $90 million in NATR's case. Peabody Energy Corporation (NYSE:BTU) is the most popular stock in this table. On the other hand Genfit SA (NASDAQ:GNFT) is the least popular one with only 1 bullish hedge fund positions. Nature's Sunshine Products Inc (NASDAQ:NATR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NATR is 57.1. 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. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on NATR as the stock returned 14.1% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
