Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Nu Skin Enterprises, Inc. (NYSE:NUS).
Nu Skin Enterprises, Inc. (NYSE:NUS) investors should be aware of an increase in hedge fund interest of late. The number of bullish hedge fund bets actually jumped 35% during the third quarter. However, this may still not be a bullish signal if there are similarly valued stocks with stronger hedge fund positions. At the end of this article we will also compare NUS to other stocks including Ryman Hospitality Properties, Inc. (REIT) (NYSE:RHP), WPX Energy Inc (NYSE:WPX), and Associated Banc Corp (NYSE:ASB) to get a better sense of its popularity.
Follow Nu Skin Enterprises Inc. (NYSE:NUS)
Follow Nu Skin Enterprises Inc. (NYSE:NUS)
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.
Bloomua/Shutterstock.com
Now, we’re going to analyze the latest action surrounding Nu Skin Enterprises, Inc. (NYSE:NUS).
How are hedge funds trading Nu Skin Enterprises, Inc. (NYSE:NUS)?
Heading into the fourth quarter of 2016, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a jump of 35% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
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 $83.7 million, accounting for 0.1% of its total 13F portfolio. On AQR Capital Management’s heels is Skybridge Capital, managed by Anthony Scaramucciá, which holds a $23.6 million position; the fund has 5.4% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism encompass D. E. Shaw’s D E Shaw, Phil Frohlich’s Prescott Group Capital Management and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.
With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, established the largest position in Nu Skin Enterprises, Inc. (NYSE:NUS). The fund reportedly had $13.1 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $5.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Ken Griffin’s Citadel Investment Group, Jim Simons’s Renaissance Technologies, and David Costen Haley’s HBK Investments.
Let’s now review 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 Ryman Hospitality Properties, Inc. (REIT) (NYSE:RHP), WPX Energy Inc (NYSE:WPX), Associated Banc Corp (NYSE:ASB), and EnerSys (NYSE:ENS). This group of stocks’ market caps are closest to NUS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RHP | 18 | 352245 | 0 |
| WPX | 33 | 676443 | -7 |
| ASB | 12 | 122108 | 1 |
| ENS | 21 | 58250 | -1 |
As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $302 million. That figure was $213 million in NUS’s case. WPX Energy Inc (NYSE:WPX) is the most popular stock in this table. On the other hand Associated Banc Corp (NYSE:ASB) is the least popular one with only 12 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard WPX might be a better candidate to consider a long position.
Disclosure: none.
