Here is What Hedge Funds Think About Herbalife Nutrition Ltd. (HLF)

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 900 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 Herbalife Nutrition Ltd. (NYSE:HLF), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Is Herbalife Nutrition Ltd. (NYSE:HLF) undervalued? The smart money was selling. The number of long hedge fund bets went down by 2 recently. Herbalife Nutrition Ltd. (NYSE:HLF) was in 38 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 44. Our calculations also showed that HLF isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 40 hedge funds in our database with HLF positions at the end of the second quarter.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind let’s check out the recent hedge fund action encompassing Herbalife Nutrition Ltd. (NYSE:HLF).

Clifford Sosin of CAS Investment Partners

Do Hedge Funds Think HLF Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2021, a total of 38 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -5% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards HLF over the last 25 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, William Duhamel’s Route One Investment Company has the biggest position in Herbalife Nutrition Ltd. (NYSE:HLF), worth close to $372.6 million, accounting for 9.6% of its total 13F portfolio. Sitting at the No. 2 spot of Renaissance Technologies, with a $370.8 million position; 0.5% of its 13F portfolio is allocated to the company. Remaining professional money managers with similar optimism contain Tom Purcell and Marco Tablada’s Alua Capital Management, Vinit Bodas’s Deccan Value Advisors and Clifford A. Sosin’s CAS Investment Partners. In terms of the portfolio weights assigned to each position General Equity Partners allocated the biggest weight to Herbalife Nutrition Ltd. (NYSE:HLF), around 15.19% of its 13F portfolio. BlueDrive Global Investors is also relatively very bullish on the stock, dishing out 13.03 percent of its 13F equity portfolio to HLF.

Because Herbalife Nutrition Ltd. (NYSE:HLF) has faced bearish sentiment from the aggregate hedge fund industry, we can see that there were a few hedge funds who were dropping their entire stakes in the third quarter. It’s worth mentioning that Kenneth Mario Garschina’s Mason Capital Management sold off the biggest stake of the “upper crust” of funds monitored by Insider Monkey, comprising an estimated $110.5 million in stock. Shashin Shah’s fund, Think Investments, also sold off its stock, about $22.2 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 2 funds in the third quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Herbalife Nutrition Ltd. (NYSE:HLF) but similarly valued. We will take a look at National Beverage Corp. (NASDAQ:FIZZ), Pan American Silver Corp. (NASDAQ:PAAS), PowerSchool Holdings Inc. (NYSE:PWSC), Victorias Secret & Co. (NYSE:VSCO), Wingstop Inc (NASDAQ:WING), Nomad Foods Limited (NYSE:NOMD), and Select Medical Holdings Corporation (NYSE:SEM). This group of stocks’ market caps are similar to HLF’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.1 hedge funds with bullish positions and the average amount invested in these stocks was $784 million. That figure was $1809 million in HLF’s case. Victorias Secret & Co. (NYSE:VSCO) is the most popular stock in this table. On the other hand PowerSchool Holdings Inc. (NYSE:PWSC) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Herbalife Nutrition Ltd. (NYSE:HLF) is more popular among hedge funds. Our overall hedge fund sentiment score for HLF is 78.9. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Unfortunately HLF wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on HLF were disappointed as the stock returned -11.8% since the end of the third quarter (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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