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In this article we are going to use hedge fund sentiment as a tool and determine whether Utah Medical Products, Inc. (NASDAQ:UTMD) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds' picks don't beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Is UTMD a good stock to buy? Hedge funds were becoming less confident. The number of long hedge fund bets retreated by 2 in recent months. Utah Medical Products, Inc. (NASDAQ:UTMD) was in 4 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 9. Our calculations also showed that UTMD isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 6 hedge funds in our database with UTMD positions at the end of the fourth quarter.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Fred DiSanto of Ancora Advisors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $27 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let's review the recent hedge fund action surrounding Utah Medical Products, Inc. (NASDAQ:UTMD).
Do Hedge Funds Think UTMD Is A Good Stock To Buy Now?
At first quarter's end, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of -33% from one quarter earlier. On the other hand, there were a total of 6 hedge funds with a bullish position in UTMD a year ago. With the smart money's sentiment swirling, there exists a few key hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, holds the number one position in Utah Medical Products, Inc. (NASDAQ:UTMD). Renaissance Technologies has a $21.4 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Renaissance Technologies's heels is Ancora Advisors, managed by Frederick DiSanto, which holds a $3.5 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that are bullish consist of Chuck Royce's Royce & Associates, Israel Englander's Millennium Management and . In terms of the portfolio weights assigned to each position Ancora Advisors allocated the biggest weight to Utah Medical Products, Inc. (NASDAQ:UTMD), around 0.1% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, designating 0.03 percent of its 13F equity portfolio to UTMD.
Judging by the fact that Utah Medical Products, Inc. (NASDAQ:UTMD) has experienced falling interest from hedge fund managers, it's easy to see that there was a specific group of money managers that decided to sell off their entire stakes heading into Q2. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital cut the biggest position of all the hedgies followed by Insider Monkey, valued at close to $0.4 million in stock. Cliff Asness's fund, AQR Capital Management, also said goodbye to its stock, about $0.4 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 2 funds heading into Q2.
Let's check out hedge fund activity in other stocks similar to Utah Medical Products, Inc. (NASDAQ:UTMD). These stocks are Atento SA (NYSE:ATTO), Neuronetics, Inc. (NASDAQ:STIM), Ceragon Networks Ltd. (NASDAQ:CRNT), Home Bancorp, Inc. (NASDAQ:HBCP), Coastal Financial Corporation (NASDAQ:CCB), Commercial Vehicle Group, Inc. (NASDAQ:CVGI), and Investors Title Company (NASDAQ:ITIC). This group of stocks' market values are closest to UTMD's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ATTO,5,128141,-1 STIM,19,123225,4 CRNT,8,25462,1 HBCP,2,6478,-1 CCB,3,25177,0 CVGI,14,72822,-6 ITIC,5,41599,-2 Average,8,60415,-0.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $60 million. That figure was $29 million in UTMD's case. Neuronetics, Inc. (NASDAQ:STIM) is the most popular stock in this table. On the other hand Home Bancorp, Inc. (NASDAQ:HBCP) is the least popular one with only 2 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 overall hedge fund sentiment score for UTMD is 22.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and surpassed the market again by 3.3 percentage points. Unfortunately UTMD wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); UTMD investors were disappointed as the stock returned -3.8% since the end of March (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.