Nature’s Sunshine Prod. (NATR): Insiders Are Buying, Should You?

Is Nature’s Sunshine Prod. (NASDAQ:NATR) going to take off soon? Money managers are in a bullish mood. The number of long hedge fund positions inched up by 1 lately.

To most stock holders, hedge funds are seen as slow, outdated financial tools of yesteryear. While there are more than 8000 funds in operation at present, we hone in on the elite of this group, around 450 funds. Most estimates calculate that this group controls the majority of the hedge fund industry’s total asset base, and by monitoring their best picks, we have found a few investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 24 percentage points in 7 months (explore the details and some picks here).

Equally as important, optimistic insider trading sentiment is a second way to break down the investments you’re interested in. There are plenty of incentives for a corporate insider to cut shares of his or her company, but only one, very clear reason why they would initiate a purchase. Many empirical studies have demonstrated the valuable potential of this strategy if you know where to look (learn more here).

Now, it’s important to take a look at the recent action encompassing Nature’s Sunshine Prod. (NASDAQ:NATR).

How have hedgies been trading Nature’s Sunshine Prod. (NASDAQ:NATR)?

Heading into 2013, a total of 7 of the hedge funds we track were long in this stock, a change of 17% from the previous quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes meaningfully.

According to our comprehensive database, Prescott Group Capital Management, managed by Phil Frohlich, holds the biggest position in Nature’s Sunshine Prod. (NASDAQ:NATR). Prescott Group Capital Management has a $27 million position in the stock, comprising 7% of its 13F portfolio. On Prescott Group Capital Management’s heels is Wynnefield Capital, managed by Nelson Obus, which held a $21.1 million position; the fund has 7.3% of its 13F portfolio invested in the stock. Some other peers that hold long positions include Jim Simons’s Renaissance Technologies, Joel Greenblatt’s Gotham Asset Management and Israel Englander’s Millennium Management.

Consequently, specific money managers have been driving this bullishness. Two Sigma Advisors, managed by John Overdeck and David Siegel, created the largest position in Nature’s Sunshine Prod. (NASDAQ:NATR). Two Sigma Advisors had 0.2 million invested in the company at the end of the quarter.

Insider trading activity in Nature’s Sunshine Prod. (NASDAQ:NATR)

Bullish insider trading is most useful when the primary stock in question has experienced transactions within the past 180 days. Over the latest 180-day time period, Nature’s Sunshine Prod. (NASDAQ:NATR) has experienced 1 unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Nature’s Sunshine Prod. (NASDAQ:NATR). These stocks are Natural Alternatives International, Inc. (NASDAQ:NAII), Prestige Brands Holdings, Inc. (NYSE:PBH), Auxilium Pharmaceuticals, Inc. (NASDAQ:AUXL), USANA Health Sciences, Inc. (NYSE:USNA), and Lifevantage Corporation (NASDAQ:LFVN). This group of stocks belong to the drug related products industry and their market caps are similar to NATR’s market cap.