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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 817 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Natural Health Trends Corp. (NASDAQ:NHTC) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
Hedge fund interest in Natural Health Trends Corp. (NASDAQ:NHTC) shares was flat at the end of last quarter. This is usually a negative indicator. 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 for a quick look at the top 5 stocks). 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 TETRA Technologies, Inc. (NYSE:TTI), Cortland Bancorp (NASDAQ:CLDB), and HMN Financial, Inc. (NASDAQ:HMNF) to gather more data points.
Video: 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' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
John Overdeck of Two Sigma Advisors
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now we're going to analyze the latest hedge fund action regarding Natural Health Trends Corp. (NASDAQ:NHTC).
What does smart money think about Natural Health Trends Corp. (NASDAQ:NHTC)?
At third quarter's end, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards NHTC over the last 21 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Renaissance Technologies has the largest position in Natural Health Trends Corp. (NASDAQ:NHTC), worth close to $5.1 million, corresponding to less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is D. E. Shaw of D E Shaw, with a $0.2 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other members of the smart money that hold long positions comprise Israel Englander's Millennium Management, John Overdeck and David Siegel's Two Sigma Advisors and . 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 0.0004 percent of its 13F equity portfolio to NHTC.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.
Let's check out hedge fund activity in other stocks similar to Natural Health Trends Corp. (NASDAQ:NHTC). We will take a look at TETRA Technologies, Inc. (NYSE:TTI), Cortland Bancorp (NASDAQ:CLDB), HMN Financial, Inc. (NASDAQ:HMNF), Vince Holding Corp (NYSE:VNCE), Network-1 Technologies Inc (NYSE:NTIP), Cocrystal Pharma, Inc. (NASDAQ:COCP), and Blueknight Energy Partners L.P. (NASDAQ:BKEP). This group of stocks' market valuations are similar to NHTC's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TTI,12,11274,-1 CLDB,2,6881,1 HMNF,3,11876,-1 VNCE,2,1582,-3 NTIP,2,3810,0 COCP,4,8747,3 BKEP,3,5649,1 Average,4,7117,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 4 hedge funds with bullish positions and the average amount invested in these stocks was $7 million. That figure was $6 million in NHTC's case. TETRA Technologies, Inc. (NYSE:TTI) is the most popular stock in this table. On the other hand Cortland Bancorp (NASDAQ:CLDB) is the least popular one with only 2 bullish hedge fund positions. Natural Health Trends Corp. (NASDAQ:NHTC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NHTC is 24.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and surpassed the market again by 16.1 percentage points. Unfortunately NHTC wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); NHTC investors were disappointed as the stock returned 3.1% since the end of September (through 11/27) 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 most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.