You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund investors like Carl Icahn and George Soros hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.
Natural Health Trends Corp. (NASDAQ:NHTC) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 10 hedge funds’ portfolios at the end of the third quarter of 2016. At the end of this article we will also compare NHTC to other stocks including Tuniu Corp (NASDAQ:TOUR), Siliconware Precision Industries (ADR) (NASDAQ:SPIL), and Avid Technology, Inc. (NASDAQ:AVID) to get a better sense of its popularity.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Keeping this in mind, let’s analyze the fresh action regarding Natural Health Trends Corp. (NASDAQ:NHTC).
What have hedge funds been doing with Natural Health Trends Corp. (NASDAQ:NHTC)?
Heading into the fourth quarter of 2016, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, unchanged from one quarter earlier. By comparison, 11 hedge funds held shares or bullish call options in NHTC heading into this year. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, which is one of the largest hedge funds in the world, has the most valuable position in Natural Health Trends Corp. (NASDAQ:NHTC), worth close to $24 million. The second most bullish fund manager is Mark Broach of Manatuck Hill Partners holding a $7.7 million position; 3.1% of its 13F portfolio is allocated to the stock. Remaining members of the smart money with similar optimism contain Cliff Asness’ AQR Capital Management, and William C. Martin’s Raging Capital Management. We should note that Raging Capital Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Due to the fact that Natural Health Trends Corp. (NASDAQ:NHTC) has witnessed no change in interest from the entirety of the hedge funds we track, we should see if there is a group of fund managers that slashed their entire stakes in the third quarter. Interestingly, Ken Griffin’s Citadel Investment Group sold off the largest position of all the hedgies tracked by Insider Monkey, comprising an estimated $1.2 million in call options, and Neil Chriss’s Hutchin Hill Capital was right behind this move, as the fund said goodbye to about $1 million worth of shares.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Natural Health Trends Corp. (NASDAQ:NHTC) but similarly valued. These stocks are Tuniu Corp (NASDAQ:TOUR), Siliconware Precision Industries (ADR) (NASDAQ:SPIL), Avid Technology, Inc. (NASDAQ:AVID), and Primo Water Corporation (NASDAQ:PRMW). This group of stocks’ market valuations are similar to NHTC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TOUR | 7 | 12923 | 3 |
| SPIL | 6 | 16403 | 1 |
| AVID | 17 | 93598 | 7 |
| PRMW | 17 | 73107 | 0 |
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $49 million. That figure was $40 million in NHTC’s case. Avid Technology, Inc. (NASDAQ:AVID) is the most popular stock in this table. On the other hand Siliconware Precision Industries (ADR) (NASDAQ:SPIL) is the least popular one with only 6 bullish hedge fund positions. Natural Health Trends Corp. (NASDAQ:NHTC) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard AVID might be a better candidate to consider taking a long position in.
Disclosure: None
