Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The Insider Monkey team has completed processing the quarterly 13F filings for the December quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Nu Skin Enterprises, Inc. (NYSE:NUS).
Is Nu Skin Enterprises, Inc. (NYSE:NUS) the right investment to pursue these days? The smart money is taking a bearish view. The number of bullish hedge fund bets were cut by 1 in recent months. Our calculations also showed that NUS isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
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 41 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 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
David Harding of Winton Capital Management
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s review the key hedge fund action regarding Nu Skin Enterprises, Inc. (NYSE:NUS).
How are hedge funds trading Nu Skin Enterprises, Inc. (NYSE:NUS)?
At Q4’s end, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -4% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards NUS over the last 18 quarters. So, let’s check 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, Cliff Asness’s AQR Capital Management has the biggest position in Nu Skin Enterprises, Inc. (NYSE:NUS), worth close to $82.7 million, accounting for 0.1% of its total 13F portfolio. Coming in second is Renaissance Technologies, with a $60.5 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other peers that are bullish comprise D. E. Shaw’s D E Shaw, John Overdeck and David Siegel’s Two Sigma Advisors and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Prescott Group Capital Management allocated the biggest weight to Nu Skin Enterprises, Inc. (NYSE:NUS), around 1.05% of its 13F portfolio. Cerebellum Capital is also relatively very bullish on the stock, dishing out 0.22 percent of its 13F equity portfolio to NUS.
Judging by the fact that Nu Skin Enterprises, Inc. (NYSE:NUS) has faced a decline in interest from the smart money, we can see that there were a few hedge funds that elected to cut their positions entirely last quarter. At the top of the heap, Peter Muller’s PDT Partners cut the biggest stake of the 750 funds tracked by Insider Monkey, worth close to $4.6 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund dropped about $1.8 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 1 funds last quarter.
Let’s now take a look at 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 Cleveland-Cliffs Inc (NYSE:CLF), Virgin Galactic Holdings, Inc. (NYSE:SPCE), NMI Holdings Inc (NASDAQ:NMIH), and Synthorx, Inc. (NASDAQ:THOR). All of these stocks’ market caps resemble NUS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CLF | 31 | 231321 | 3 |
| SPCE | 32 | 285203 | 6 |
| NMIH | 21 | 263260 | 1 |
| THOR | 25 | 1284990 | 18 |
| Average | 27.25 | 516194 | 7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.25 hedge funds with bullish positions and the average amount invested in these stocks was $516 million. That figure was $231 million in NUS’s case. Virgin Galactic Holdings, Inc. (NYSE:SPCE) is the most popular stock in this table. On the other hand NMI Holdings Inc (NASDAQ:NMIH) is the least popular one with only 21 bullish hedge fund positions. Nu Skin Enterprises, Inc. (NYSE:NUS) 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. 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 10.1 percentage points. These stocks lost 13.0% in 2020 through April 6th but beat the market by 4.2 percentage points. Unfortunately NUS wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); NUS investors were disappointed as the stock returned -48.5% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
