In this article we will check out the progression of hedge fund sentiment towards USANA Health Sciences, Inc. (NYSE:USNA) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is USNA a good stock to buy? USANA Health Sciences, Inc. (NYSE:USNA) was in 21 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 22. USNA investors should pay attention to an increase in enthusiasm from smart money lately. There were 19 hedge funds in our database with USNA positions at the end of the first quarter. Our calculations also showed that USNA isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
David Siegel of Two Sigma Advisors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s analyze the key hedge fund action encompassing USANA Health Sciences, Inc. (NYSE:USNA).
Do Hedge Funds Think USNA Is A Good Stock To Buy Now?
At second quarter’s end, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from the first quarter of 2020. By comparison, 19 hedge funds held shares or bullish call options in USNA a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of USANA Health Sciences, Inc. (NYSE:USNA), with a stake worth $158.3 million reported as of the end of June. Trailing Renaissance Technologies was D E Shaw, which amassed a stake valued at $21.9 million. Arrowstreet Capital, GLG Partners, and Two Sigma Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Prescott Group Capital Management allocated the biggest weight to USANA Health Sciences, Inc. (NYSE:USNA), around 0.75% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, dishing out 0.2 percent of its 13F equity portfolio to USNA.
As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Bridgewater Associates, managed by Ray Dalio, assembled the most valuable position in USANA Health Sciences, Inc. (NYSE:USNA). Bridgewater Associates had $3.7 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also initiated a $0.3 million position during the quarter. The following funds were also among the new USNA investors: Mika Toikka’s AlphaCrest Capital Management and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as USANA Health Sciences, Inc. (NYSE:USNA) but similarly valued. These stocks are Translate Bio, Inc. (NASDAQ:TBIO), Two Harbors Investment Corp (NYSE:TWO), Establishment Labs Holdings Inc. (NASDAQ:ESTA), PennyMac Mortgage Investment Trust (NYSE:PMT), B. Riley Financial, Inc. (NASDAQ:RILY), BancFirst Corporation (NASDAQ:BANF), and Workhorse Group, Inc. (NASDAQ:WKHS). All of these stocks’ market caps resemble USNA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TBIO | 17 | 667464 | -3 |
| TWO | 30 | 160798 | -2 |
| ESTA | 17 | 353806 | 4 |
| PMT | 11 | 10452 | 3 |
| RILY | 24 | 145562 | -1 |
| BANF | 7 | 10680 | 3 |
| WKHS | 13 | 60261 | -3 |
| Average | 17 | 201289 | 0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $201 million. That figure was $237 million in USNA’s case. Two Harbors Investment Corp (NYSE:TWO) is the most popular stock in this table. On the other hand BancFirst Corporation (NASDAQ:BANF) is the least popular one with only 7 bullish hedge fund positions. USANA Health Sciences, Inc. (NYSE:USNA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for USNA is 66.1. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 24% in 2021 through October 22nd and beat the market again by 1.6 percentage points. Unfortunately USNA wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on USNA were disappointed as the stock returned -2.5% since the end of June (through 10/22) 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 many of these stocks already outperformed the market since 2019.
Follow Usana Health Sciences Inc (NYSE:USNA)
Follow Usana Health Sciences Inc (NYSE:USNA)
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Disclosure: None. This article was originally published at Insider Monkey.
