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 March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Nature's Sunshine Products Inc (NASDAQ:NATR) based on those filings.
Hedge fund interest in Nature's Sunshine Products Inc (NASDAQ:NATR) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare NATR to other stocks including PICO Holdings Inc (NASDAQ:PICO), Gencor Industries, Inc. (NASDAQ:GENC), and Timberland Bancorp, Inc. (NASDAQ:TSBK) to get a better sense of its popularity. 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_267751" align="aligncenter" width="399"] Nelson Obus of Wynnefield Capital[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's take a look at the new hedge fund action regarding Nature's Sunshine Products Inc (NASDAQ:NATR).
What does smart money think about Nature's Sunshine Products Inc (NASDAQ:NATR)?
Heading into the second quarter of 2020, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards NATR over the last 18 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Willem Mesdag's Red Mountain Capital has the largest position in Nature's Sunshine Products Inc (NASDAQ:NATR), worth close to $20.5 million, comprising 35.8% of its total 13F portfolio. Coming in second is Nelson Obus of Wynnefield Capital, with a $19.4 million position; 18.4% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors that are bullish contain Phil Frohlich's Prescott Group Capital Management, Wilmot B. Harkey and Daniel Mack's Nantahala Capital Management and Renaissance Technologies. In terms of the portfolio weights assigned to each position Red Mountain Capital allocated the biggest weight to Nature's Sunshine Products Inc (NASDAQ:NATR), around 35.77% of its 13F portfolio. Wynnefield Capital is also relatively very bullish on the stock, dishing out 18.42 percent of its 13F equity portfolio to NATR.
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 first 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 now review hedge fund activity in other stocks similar to Nature's Sunshine Products Inc (NASDAQ:NATR). We will take a look at PICO Holdings Inc (NASDAQ:PICO), Gencor Industries, Inc. (NASDAQ:GENC), Timberland Bancorp, Inc. (NASDAQ:TSBK), and Alexco Resource Corp. (NYSE:AXU). This group of stocks' market caps are closest to NATR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PICO,13,20900,1 GENC,4,20616,1 TSBK,3,19601,-2 AXU,4,763,2 Average,6,15470,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $15 million. That figure was $66 million in NATR's case. PICO Holdings Inc (NASDAQ:PICO) is the most popular stock in this table. On the other hand Timberland Bancorp, Inc. (NASDAQ:TSBK) is the least popular one with only 3 bullish hedge fund positions. Nature's Sunshine Products Inc (NASDAQ:NATR) is not the least popular stock in this group but hedge fund interest is still below average. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th and surpassed the market by 14.2 percentage points. Unfortunately NATR wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); NATR investors were disappointed as the stock returned 16.9% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.