We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Keeping this in mind let's see whether USANA Health Sciences, Inc. (NYSE:USNA) represents a good buying opportunity at the moment. Let’s quickly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on satellite photos and other research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail inconceivably on some occasions, but net net their stock picks have been generating superior risk-adjusted returns on average over the years.
USANA Health Sciences, Inc. (NYSE:USNA) shareholders have witnessed a decrease in hedge fund interest in recent months. USNA was in 12 hedge funds' portfolios at the end of December. There were 14 hedge funds in our database with USNA holdings at the end of the previous quarter. Our calculations also showed that USNA isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
In the 21st century investor’s toolkit there are several indicators stock market investors can use to assess stocks. Some of the most innovative indicators are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the best investment managers can beat the market by a significant amount (see the details here).
[caption id="attachment_189632" align="aligncenter" width="399"] David Harding of Winton Capital Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve and other Central Banks are tripping over each other to print more money. As a result, we believe gold stocks will outperform fixed income ETFs in the long-term. So we are checking out investment opportunities like this one. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic's significance before most investors. With all of this in mind let's take a peek at the key hedge fund action surrounding USANA Health Sciences, Inc. (NYSE:USNA).
How are hedge funds trading USANA Health Sciences, Inc. (NYSE:USNA)?
At Q4's end, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards USNA over the last 18 quarters. With hedge funds' sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
The largest stake in USANA Health Sciences, Inc. (NYSE:USNA) was held by Renaissance Technologies, which reported holding $127.7 million worth of stock at the end of September. It was followed by D E Shaw with a $29.4 million position. Other investors bullish on the company included GLG Partners, AQR Capital Management, and Winton Capital Management. In terms of the portfolio weights assigned to each position Quantinno Capital allocated the biggest weight to USANA Health Sciences, Inc. (NYSE:USNA), around 0.33% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.1 percent of its 13F equity portfolio to USNA.
Seeing as USANA Health Sciences, Inc. (NYSE:USNA) has faced bearish sentiment from hedge fund managers, it's easy to see that there is a sect of fund managers who were dropping their positions entirely heading into Q4. At the top of the heap, Steve Cohen's Point72 Asset Management said goodbye to the largest position of all the hedgies monitored by Insider Monkey, comprising an estimated $0.9 million in stock. Mika Toikka's fund, AlphaCrest Capital Management, also sold off its stock, about $0.5 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 2 funds heading into Q4.
Let's also examine hedge fund activity in other stocks similar to USANA Health Sciences, Inc. (NYSE:USNA). These stocks are Dril-Quip, Inc. (NYSE:DRQ), Colony Credit Real Estate, Inc. (NYSE:CLNC), Sonos, Inc. (NASDAQ:SONO), and Alexander's, Inc. (NYSE:ALX). This group of stocks' market caps resemble USNA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DRQ,21,129761,1 CLNC,8,26571,1 SONO,26,196559,-3 ALX,13,115349,1 Average,17,117060,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $117 million. That figure was $196 million in USNA's case. Sonos, Inc. (NASDAQ:SONO) is the most popular stock in this table. On the other hand Colony Credit Real Estate, Inc. (NYSE:CLNC) is the least popular one with only 8 bullish hedge fund positions. USANA Health Sciences, Inc. (NYSE:USNA) is not the least popular stock in this group but hedge fund interest is still below average. 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 10.1 percentage points. These stocks lost 13.0% in 2020 through April 6th but still beat the market by 4.2 percentage points. A small number of hedge funds were also right about betting on USNA as the stock returned -10.7% during the same time period and outperformed the market by an even larger margin. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.