The first quarter was a breeze as Powell pivoted, and China seemed eager to reach a deal with Trump. Both the S&P 500 and Russell 2000 delivered very strong gains as a result, with the Russell 2000, which is composed of smaller companies, outperforming the large-cap stocks slightly during the first quarter. Unfortunately sentiment shifted in May as this time China pivoted and Trump put more pressure on China by increasing tariffs. Hedge funds' top 20 stock picks performed spectacularly in this volatile environment. These stocks delivered a total gain of 18.7% through May 30th, vs. a gain of 12.1% for the S&P 500 ETF. In this article we will look at how this market volatility affected the sentiment of hedge funds towards USANA Health Sciences, Inc. (NYSE:USNA), and what that likely means for the prospects of the company and its stock.
USANA Health Sciences, Inc. (NYSE:USNA) was in 22 hedge funds' portfolios at the end of the first quarter of 2019. USNA has seen an increase in hedge fund sentiment of late. There were 19 hedge funds in our database with USNA positions at the end of the previous quarter. Our calculations also showed that USNA isn't among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? 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 market by 40 percentage points since May 2014 through May 30, 2019 (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 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_746830" align="aligncenter" width="473"] Matthew Hulsizer of PEAK6 Capital[/caption]
We're going to go over the fresh hedge fund action regarding USANA Health Sciences, Inc. (NYSE:USNA).
How have hedgies been trading USANA Health Sciences, Inc. (NYSE:USNA)?
At Q1's end, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 16% from the previous quarter. On the other hand, there were a total of 14 hedge funds with a bullish position in USNA a year ago. So, let's examine 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 $160 million reported as of the end of March. Trailing Renaissance Technologies was Arrowstreet Capital, which amassed a stake valued at $26.6 million. AQR Capital Management, Millennium Management, and D E Shaw were also very fond of the stock, giving the stock large weights in their portfolios.
As aggregate interest increased, some big names have jumped into USANA Health Sciences, Inc. (NYSE:USNA) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, assembled the most outsized position in USANA Health Sciences, Inc. (NYSE:USNA). Marshall Wace LLP had $3.5 million invested in the company at the end of the quarter. Dmitry Balyasny's Balyasny Asset Management also made a $0.7 million investment in the stock during the quarter. The following funds were also among the new USNA investors: Benjamin A. Smith's Laurion Capital Management, Matthew Hulsizer's PEAK6 Capital Management, and Ken Griffin's Citadel Investment Group.
Let's also examine hedge fund activity in other stocks similar to USANA Health Sciences, Inc. (NYSE:USNA). We will take a look at Insight Enterprises, Inc. (NASDAQ:NSIT), Taylor Morrison Home Corp (NYSE:TMHC), Atlantica Yield plc (NASDAQ:AY), and Inphi Corporation (NYSE:IPHI). This group of stocks' market valuations resemble USNA's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NSIT,17,119442,-4 TMHC,12,184668,-3 AY,21,239050,-1 IPHI,21,164662,0 Average,17.75,176956,-2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.75 hedge funds with bullish positions and the average amount invested in these stocks was $177 million. That figure was $313 million in USNA's case. Atlantica Yield plc (NASDAQ:AY) is the most popular stock in this table. On the other hand Taylor Morrison Home Corp (NYSE:TMHC) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks USANA Health Sciences, Inc. (NYSE:USNA) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately USNA wasn't nearly as popular as these 20 stocks and hedge funds that were betting on USNA were disappointed as the stock returned -13.3% during the same 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 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.