After several tireless days we have finished crunching the numbers from nearly 750 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Natural Health Trends Corp. (NASDAQ:NHTC).
Is Natural Health Trends Corp. (NASDAQ:NHTC) a good investment today? The best stock pickers are taking a pessimistic view. The number of long hedge fund bets fell by 3 in recent months. Our calculations also showed that NHTC isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). NHTC was in 5 hedge funds' portfolios at the end of the third quarter of 2019. There were 8 hedge funds in our database with NHTC holdings at the end of the previous quarter. 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_746830" align="aligncenter" width="1613"] Matthew Hulsizer of PEAK6 Capital[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. Keeping this in mind we're going to view the recent hedge fund action regarding Natural Health Trends Corp. (NASDAQ:NHTC).
How are hedge funds trading Natural Health Trends Corp. (NASDAQ:NHTC)?
At the end of the third quarter, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of -38% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in NHTC over the last 17 quarters. With hedgies' sentiment swirling, there exists a few notable hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Natural Health Trends Corp. (NASDAQ:NHTC), with a stake worth $6.1 million reported as of the end of September. Trailing Renaissance Technologies was D E Shaw, which amassed a stake valued at $0.8 million. Millennium Management, Two Sigma Advisors, and PEAK6 Capital 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 Renaissance Technologies allocated the biggest weight to Natural Health Trends Corp. (NASDAQ:NHTC), around 0.01% of its 13F portfolio. Two Sigma Advisors is also relatively very bullish on the stock, setting aside 0.0015 percent of its 13F equity portfolio to NHTC.
Judging by the fact that Natural Health Trends Corp. (NASDAQ:NHTC) has witnessed a decline in interest from the entirety of the hedge funds we track, it's safe to say that there were a few hedge funds that decided to sell off their positions entirely last quarter. Interestingly, Cliff Asness's AQR Capital Management sold off the largest stake of all the hedgies followed by Insider Monkey, totaling about $0.7 million in stock. Peter Rathjens, Bruce Clarke and John Campbell's fund, Arrowstreet Capital, also dropped its stock, about $0.4 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 3 funds last quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Natural Health Trends Corp. (NASDAQ:NHTC) but similarly valued. We will take a look at Amtech Systems, Inc. (NASDAQ:ASYS), Applied Genetic Technologies Corp (NASDAQ:AGTC), Global Ship Lease, Inc. (NYSE:GSL), and Genocea Biosciences Inc (NASDAQ:GNCA). This group of stocks' market values are similar to NHTC's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ASYS,7,21296,0 AGTC,9,9346,4 GSL,11,22635,8 GNCA,11,15243,0 Average,9.5,17130,3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.5 hedge funds with bullish positions and the average amount invested in these stocks was $17 million. That figure was $8 million in NHTC's case. Global Ship Lease, Inc. (NYSE:GSL) is the most popular stock in this table. On the other hand Amtech Systems, Inc. (NASDAQ:ASYS) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Natural Health Trends Corp. (NASDAQ:NHTC) is even less popular than ASYS. Hedge funds dodged a bullet by taking a bearish stance towards NHTC. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately NHTC wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); NHTC investors were disappointed as the stock returned -13.8% 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 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.