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Hedge Funds Are Dumping Utah Medical Products, Inc. (UTMD)

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We are still in an overall bull market and many stocks that smart money investors were piling into surged through October 17th. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 45% and 39% respectively. Hedge funds' top 3 stock picks returned 34.4% this year and beat the S&P 500 ETFs by 13 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like Utah Medical Products, Inc. (NASDAQ:UTMD).

Utah Medical Products, Inc. (NASDAQ:UTMD) has seen a decrease in hedge fund sentiment in recent months. Our calculations also showed that UTMD isn't among the 30 most popular stocks among hedge funds (see the video below).

5 Most Popular Stocks Among Hedge Funds
5 Most Popular Stocks Among Hedge Funds

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 market by 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Paul Marshall Marshall Wace
Paul Marshall Marshall Wace

In addition to following the biggest hedge funds for investment ideas, we also share stock pitches from conferences, investor letters and other sources like this one where the fund manager is talking about two under the radar 1000% return potential stocks: first one in internet infrastructure and the second in the heart of advertising market. We use hedge fund buy/sell signals to determine whether to conduct in-depth analysis of these stock ideas which take days. We're going to analyze the fresh hedge fund action regarding Utah Medical Products, Inc. (NASDAQ:UTMD).

What have hedge funds been doing with Utah Medical Products, Inc. (NASDAQ:UTMD)?

At Q2's end, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from the first quarter of 2019. By comparison, 8 hedge funds held shares or bullish call options in UTMD a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

UTMD_oct2019
UTMD_oct2019

More specifically, Renaissance Technologies was the largest shareholder of Utah Medical Products, Inc. (NASDAQ:UTMD), with a stake worth $23.8 million reported as of the end of March. Trailing Renaissance Technologies was Ancora Advisors, which amassed a stake valued at $8.7 million. Royce & Associates, AQR Capital Management, and Marshall Wace LLP were also very fond of the stock, giving the stock large weights in their portfolios.

Judging by the fact that Utah Medical Products, Inc. (NASDAQ:UTMD) has experienced bearish sentiment from the smart money, logic holds that there were a few hedge funds that elected to cut their entire stakes by the end of the second quarter. Interestingly, Noam Gottesman's GLG Partners dropped the biggest investment of the "upper crust" of funds tracked by Insider Monkey, valued at about $0.3 million in stock. Israel Englander's fund, Millennium Management, also said goodbye to its stock, about $0.2 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 2 funds by the end of the second quarter.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Utah Medical Products, Inc. (NASDAQ:UTMD) but similarly valued. These stocks are Camtek LTD. (NASDAQ:CAMT), Petmed Express Inc (NASDAQ:PETS), Beazer Homes USA, Inc. (NYSE:BZH), and StarTek, Inc. (NYSE:SRT). This group of stocks' market caps resemble UTMD's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CAMT,10,25400,0 PETS,17,67787,1 BZH,7,25276,-2 SRT,3,8110,-4 Average,9.25,31643,-1.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.25 hedge funds with bullish positions and the average amount invested in these stocks was $32 million. That figure was $38 million in UTMD's case. Petmed Express Inc (NASDAQ:PETS) is the most popular stock in this table. On the other hand StarTek, Inc. (NYSE:SRT) is the least popular one with only 3 bullish hedge fund positions. Utah Medical Products, Inc. (NASDAQ:UTMD) 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 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately UTMD wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); UTMD investors were disappointed as the stock returned 0.4% during the third 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 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.

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

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