The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on September 30th. We at Insider Monkey have made an extensive database of nearly 750 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Nu Skin Enterprises, Inc. (NYSE:NUS) based on those filings.
Nu Skin Enterprises, Inc. (NYSE:NUS) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 20 hedge funds' portfolios at the end of September. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Pluralsight, Inc. (NASDAQ:PS), Jack in the Box Inc. (NASDAQ:JACK), and Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (NASDAQ:OMAB) to gather more data points. Our calculations also showed that NUS isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_673876" align="aligncenter" width="473"] John Overdeck of Two Sigma Advisors[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. Let's check out the new hedge fund action encompassing Nu Skin Enterprises, Inc. (NYSE:NUS).
What have hedge funds been doing with Nu Skin Enterprises, Inc. (NYSE:NUS)?
At Q3's end, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2019. By comparison, 18 hedge funds held shares or bullish call options in NUS a year ago. With hedge funds' sentiment swirling, there exists a few key hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
Among these funds, AQR Capital Management held the most valuable stake in Nu Skin Enterprises, Inc. (NYSE:NUS), which was worth $71.3 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $62.3 million worth of shares. D E Shaw, Two Sigma Advisors, and Millennium Management 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 Nu Skin Enterprises, Inc. (NYSE:NUS), around 0.45% of its 13F portfolio. Portolan Capital Management is also relatively very bullish on the stock, dishing out 0.28 percent of its 13F equity portfolio to NUS.
Because Nu Skin Enterprises, Inc. (NYSE:NUS) has witnessed bearish sentiment from hedge fund managers, we can see that there is a sect of funds that decided to sell off their positions entirely by the end of the third quarter. Interestingly, Lee Ainslie's Maverick Capital dumped the largest position of the 750 funds followed by Insider Monkey, totaling about $3 million in stock, and Donald Sussman's Paloma Partners was right behind this move, as the fund sold off about $0.6 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now review hedge fund activity in other stocks similar to Nu Skin Enterprises, Inc. (NYSE:NUS). These stocks are Pluralsight, Inc. (NASDAQ:PS), Jack in the Box Inc. (NASDAQ:JACK), Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (NASDAQ:OMAB), and MakeMyTrip Limited (NASDAQ:MMYT). This group of stocks' market caps are closest to NUS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PS,20,140370,0 JACK,29,478938,-4 OMAB,7,48367,0 MMYT,8,62829,-3 Average,16,182626,-1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $183 million. That figure was $245 million in NUS's case. Jack in the Box Inc. (NASDAQ:JACK) is the most popular stock in this table. On the other hand Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (NASDAQ:OMAB) is the least popular one with only 7 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately NUS wasn't nearly as popular as these 20 stocks and hedge funds that were betting on NUS were disappointed as the stock returned -9.2% during the fourth quarter (through the end of November) 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.