While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, increasing oil prices and optimism towards the resolution of the trade war with China, many smart money investors kept their cautious approach regarding the current bull run in the first quarter and hedging or reducing many of their long positions. However, as we know, big investors usually buy stocks with strong fundamentals, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Natural Health Trends Corp. (NASDAQ:NHTC).
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 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.
We're going to check out the key hedge fund action encompassing Natural Health Trends Corp. (NASDAQ:NHTC).
What have hedge funds been doing with Natural Health Trends Corp. (NASDAQ:NHTC)?
At Q1's end, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 33% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards NHTC over the last 15 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Natural Health Trends Corp. (NASDAQ:NHTC) was held by Renaissance Technologies, which reported holding $12.2 million worth of stock at the end of March. It was followed by GLG Partners with a $2.6 million position. Other investors bullish on the company included Arrowstreet Capital, AQR Capital Management, and D E Shaw.
As industrywide interest jumped, specific money managers have jumped into Natural Health Trends Corp. (NASDAQ:NHTC) headfirst. Millennium Management, managed by Israel Englander, created the most valuable position in Natural Health Trends Corp. (NASDAQ:NHTC). Millennium Management had $1.1 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also made a $0.7 million investment in the stock during the quarter. The following funds were also among the new NHTC investors: Roger Ibbotson's Zebra Capital Management, David Harding's Winton Capital Management, and Peter Algert and Kevin Coldiron's Algert Coldiron Investors.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Natural Health Trends Corp. (NASDAQ:NHTC) but similarly valued. These stocks are Allena Pharmaceuticals, Inc. (NASDAQ:ALNA), Quintana Energy Services Inc. (NYSE:QES), First Community Corporation (NASDAQ:FCCO), and Anavex Life Sciences Corp. (NASDAQ:AVXL). This group of stocks' market valuations resemble NHTC's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ALNA,5,37096,0 QES,2,14253,0 FCCO,3,11917,0 AVXL,5,13158,0 Average,3.75,19106,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 3.75 hedge funds with bullish positions and the average amount invested in these stocks was $19 million. That figure was $23 million in NHTC's case. Allena Pharmaceuticals, Inc. (NASDAQ:ALNA) is the most popular stock in this table. On the other hand Quintana Energy Services Inc. (NYSE:QES) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Natural Health Trends Corp. (NASDAQ:NHTC) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately NHTC wasn't nearly as popular as these 20 stocks and hedge funds that were betting on NHTC were disappointed as the stock returned -35.6% 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.