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Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Utah Medical Products, Inc. (NASDAQ:UTMD).
Hedge fund interest in Utah Medical Products, Inc. (NASDAQ:UTMD) 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 UTMD to other stocks including PCSB Financial Corporation (NASDAQ:PCSB), Diamond Eagle Acquisition Corp. (NASDAQ:DEACU), and Enterprise Bancorp, Inc (NASDAQ:EBTC) to get a better sense of its popularity.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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Chuck Royce of Royce & Associates[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. Keeping this in mind let's go over the fresh hedge fund action encompassing Utah Medical Products, Inc. (NASDAQ:UTMD).
How are hedge funds trading Utah Medical Products, Inc. (NASDAQ:UTMD)?
At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. By comparison, 9 hedge funds held shares or bullish call options in UTMD a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Utah Medical Products, Inc. (NASDAQ:UTMD), with a stake worth $22.8 million reported as of the end of September. Trailing Renaissance Technologies was Ancora Advisors, which amassed a stake valued at $6.6 million. Royce & Associates, AQR Capital Management, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Ancora Advisors allocated the biggest weight to Utah Medical Products, Inc. (NASDAQ:UTMD), around 0.29% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, earmarking 0.03 percent of its 13F equity portfolio to UTMD.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Marshall Wace. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Citadel Investment Group).
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Utah Medical Products, Inc. (NASDAQ:UTMD) but similarly valued. We will take a look at PCSB Financial Corporation (NASDAQ:PCSB), Diamond Eagle Acquisition Corp. (NASDAQ:DEACU), Enterprise Bancorp, Inc (NASDAQ:EBTC), and Guaranty Bancshares, Inc. (NASDAQ:GNTY). All of these stocks' market caps match UTMD's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PCSB,9,26855,-1 DEACU,7,62426,7 EBTC,4,2372,3 GNTY,4,4311,1 Average,6,23991,2.5 [/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 $24 million. That figure was $35 million in UTMD's case. PCSB Financial Corporation (NASDAQ:PCSB) is the most popular stock in this table. On the other hand Enterprise Bancorp, Inc (NASDAQ:EBTC) is the least popular one with only 4 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on UTMD as the stock returned 11.5% during the first two months of Q4 and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.