Most investors consider hedge funds and other money managers worthless because they cannot outperform even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market we’ve seen in recent years. However, hedge funds are generally partially hedged and aim to generate attractive risk-adjusted returns rather than following the ups and downs of the stock markets in hopes that they will outperform the broader market. Our research shows that certain hedge funds have excellent stock picking skills (and we can pretty much identify these hedge funds in advance). So let’s take a look at the smart money sentiment towards Herbalife Nutrition Ltd. (NYSE:HLF).

Is Herbalife Nutrition Ltd. (NYSE:HLF) the right investment to keep track of these days? Hedge funds bet on the stock. The number of long hedge fund bets has increased by 5 recently. Herbalife Nutrition Ltd. (NYSE:HLF) was in 41 hedge fund portfolios at the end of the fourth quarter of 2020. The all-time high for this statistic is 44. Our calculations also showed that HLF is not one of them 30 Most Popular Stocks Among Hedge Funds (Click here for the Q4 ranking). At the end of the third quarter, there were 36 hedge funds in our database with HLF positions.

The reputation of hedge funds as savvy investors has been tarnished over the past decade as their hedged returns have not kept up with the unhedged returns of market indices. Hedge funds manage more than $ 3.5 trillion in assets. So you can’t expect your entire portfolio to outperform the market by large margins. Our research was able to pre-identify a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (Details can be found here). So you can still find plenty of gems by following hedge fund movements today.

The most popular stocks among hedge funds

Carl Icahn from Icahn Capital

At Insider Monkey, we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking inventory levels like this emerging lithium inventory. We go through lists like 10 best hydrogen fuel cell stocks to pick the next Tesla that delivers a 10x return. While we recommend positions in only a tiny fraction of the companies we analyze, we review as many stocks as possible. We read investor letters from hedge funds and listen to stock prices at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With that in mind, we’ll take a look at the new hedge fund promotion Herbalife Nutrition Ltd. (NYSE:HLF).

The story goes on

Do Hedge Funds Think HLF Is A Good Stock To Buy Now?

At the end of the fourth quarter, a total of 41 of the hedge funds tracked by Insider Monkey were long positions in this stock, a change of 14% from the previous quarter. On the flip side, a year ago there were a total of 32 hedge funds with a bullish position in HLF. As the capital of smart money changes hands, there is an “upper tier” of key hedge fund managers who have significantly increased their stakes (or have already accumulated large positions).

Is HLF a Good Stock to Buy?

Is HLF a Good Stock to Buy?

According to Insider Monkey’s hedge fund database Icahn Capital LP, managed by Carl Icahn, holds the largest position in Herbalife Nutrition Ltd. (NYSE: HLF). Icahn Capital LP has a $ 985.3 million position in the stock, which represents 4.9% of its 13F portfolio. In second place is Renaissance Technologies with a position of $ 521.2 million. The fund has invested 0.6% of its 13F portfolio in the stock. Remaining bullish hedge funds and institutional investors include Route One Investment Company from William Duhamel, Deccan Value Advisors from Vinit Bodas, and those from Tom Purcell and Marco Tablada Alua Capital Management. In relation to the portfolio weights assigned to each position, Bronte Capital Herbalife Nutrition Ltd. (NYSE: HLF) assigned the largest weight at around 15.65% of its 13F portfolio. General Equity Partners is also relatively bullish on the stock, spending 14.38 percent of its 13F stock portfolio in HLF.

As overall interest increased, a few big names drove this upward trend. Alua Capital Management, managed by Tom Purcell and Marco Tablada, initiated the largest position in Herbalife Nutrition Ltd. (NYSE: HLF). Alua Capital Management had invested USD 138.4 million in the company at the end of the quarter. Kenneth Mario Garschina Mason Capital Management also initiated a position of $ 109.1 million in the quarter. The other funds with brand new HLF positions are Steve Cohen’s Point72 Asset Management, Dmitry Balyasnys Balyasny Asset Management, and Richard Schimel and Lawrence Sapanski’s Cinctive Capital Management.

Now let’s take a look at the activity of hedge funds in other stocks that Herbalife Nutrition Ltd. (NYSE: HLF) are similar. These stocks are The Timken Company (NYSE:TKR), MSA Safety Incorporated (NYSE:MSA), 1Life Healthcare, Inc. (NASDAQ:ONEM), Life Storage, Inc. (NYSE:LSI), BRP Inc. (NASDAQ:DOOO), Columbia Sportswear Company (NASDAQ:COLM) and Elbit Systems Ltd. (NASDAQ:ESLT). All market caps of these stocks are similar to HLF’s market cap.

[table] Ticker, number of HRs with positions, total value of HR positions (x1000), change in HR position TKR, 34.265044.0 MSA, 13.18744, -1 ONEM, 30.787070.8 LSI, 17.142613, – 1 DOOO, 15.181614, 3 COLM, 14,112803, -5 ESLT, 5,25092.1 Average, 18.3,218997,0.7 [/table]

View table here When formatting problems occur.

As you can see, these stocks had an average of 18.3 hedge funds with bullish positions and the average amount invested in these stocks was $ 219 million. That figure was $ 2,726 million in the case of HLF. The Timken Company (NYSE:TKR) is the most popular stock in this table. On the other hand, Elbit Systems Ltd. (NASDAQ:ESLT) is the least popular with only 5 bullish hedge fund positions. Compared to these stocks, Herbalife Nutrition Ltd. (NYSE: HLF) more popular with hedge funds. Our overall hedge fund sentiment score for HLF is 88. Stocks with a higher number of hedge fund positions compared to other stocks and relative to their historical range receive a higher sentiment score. Our calculations have shown that Top 10 most popular stocks Hedge funds returned 90.7% in 2019 and 2020, outperforming the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% through April 30, 2021, still outperforming the market by 1.6 percentage points. Unfortunately, HLF was nowhere near as popular as these 10 stocks and hedge funds that backed HLF disappointed as the stock returned -4.7% and underperformed since the end of the fourth quarter (through April 30) compared to the market. If you’re interested in investing in large-cap stocks with big upside potential, this is what you should check out Top 10 most popular stocks among hedge funds, as most of these stocks have outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider monkey.

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