Did Hedge Funds Make The Right Call On Nu Skin Enterprises, Inc. (NUS)?
Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Nu Skin Enterprises, Inc. (NYSE:NUS) based on that data and determine whether they were really smart about the stock.
Nu Skin Enterprises, Inc. (NYSE:NUS) shareholders have witnessed a decrease in support from the world's most elite money managers of late. NUS was in 18 hedge funds' portfolios at the end of the first quarter of 2020. There were 22 hedge funds in our database with NUS positions at the end of the previous quarter. Our calculations also showed that NUS 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.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. Cannabis stocks are roaring back in 2020, so we are checking out this under-the-radar stock. We go through lists like the 10 most profitable companies in America 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. With all of this in mind we're going to take a look at the key hedge fund action regarding Nu Skin Enterprises, Inc. (NYSE:NUS).
How have hedgies been trading Nu Skin Enterprises, Inc. (NYSE:NUS)?
Heading into the second quarter of 2020, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from the previous quarter. The graph below displays the number of hedge funds with bullish position in NUS over the last 18 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the most valuable position in Nu Skin Enterprises, Inc. (NYSE:NUS). AQR Capital Management has a $38.7 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is Renaissance Technologies, with a $22.2 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors with similar optimism consist of D. E. Shaw's D E Shaw, John Overdeck and David Siegel's Two Sigma Advisors and Michael Zimmerman's Prentice Capital Management. In terms of the portfolio weights assigned to each position Prentice Capital Management allocated the biggest weight to Nu Skin Enterprises, Inc. (NYSE:NUS), around 2.72% of its 13F portfolio. Prescott Group Capital Management is also relatively very bullish on the stock, setting aside 2.07 percent of its 13F equity portfolio to NUS.
Because Nu Skin Enterprises, Inc. (NYSE:NUS) has witnessed falling interest from the aggregate hedge fund industry, it's safe to say that there exists a select few funds who were dropping their positions entirely in the first quarter. At the top of the heap, George McCabe's Portolan Capital Management cut the biggest position of the "upper crust" of funds tracked by Insider Monkey, worth about $1.8 million in stock, and Steve Cohen's Point72 Asset Management was right behind this move, as the fund cut about $0.9 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 4 funds in the first quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Nu Skin Enterprises, Inc. (NYSE:NUS) but similarly valued. We will take a look at SPX FLOW, Inc. (NASDAQ:FLOW), Sunrun Inc (NASDAQ:RUN), SciPlay Corporation (NASDAQ:SCPL), and 360 Finance, Inc. (NASDAQ:QFIN). This group of stocks' market values match NUS's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FLOW,15,117620,-1 RUN,24,367076,1 SCPL,17,80281,2 QFIN,3,10465,-9 Average,14.75,143861,-1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.75 hedge funds with bullish positions and the average amount invested in these stocks was $144 million. That figure was $111 million in NUS's case. Sunrun Inc (NASDAQ:RUN) is the most popular stock in this table. On the other hand 360 Finance, Inc. (NASDAQ:QFIN) is the least popular one with only 3 bullish hedge fund positions. Nu Skin Enterprises, Inc. (NYSE:NUS) 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 18.6% in 2020 through July 27th but still beat the market by 17.1 percentage points. Hedge funds were also right about betting on NUS as the stock returned 103.2% since Q1 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.
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