Is UTMD A Good Stock To Buy Now?
Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the third quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Utah Medical Products, Inc. (NASDAQ:UTMD) based on that data.
Is UTMD a good stock to buy now? 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. Our calculations also showed that UTMD isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Midland States Bancorp, Inc. (NASDAQ:MSBI), The Manitowoc Company, Inc. (NYSE:MTW), and Verona Pharma plc (NASDAQ:VRNA) to gather more data points.
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 66 percentage points since March 2017 (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 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Cliff Asness of AQR Capital Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. 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 website. With all of this in mind we're going to take a peek at 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 the end of September, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter of 2020. 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 capital changing hands, there exists a select group of notable hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Renaissance Technologies, holds the largest position in Utah Medical Products, Inc. (NASDAQ:UTMD). Renaissance Technologies has a $19.2 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Ancora Advisors, led by Frederick DiSanto, holding a $3.3 million position; 0.1% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors that hold long positions comprise Chuck Royce's Royce & Associates, Israel Englander's Millennium Management and Cliff Asness's AQR Capital Management. In terms of the portfolio weights assigned to each position Ancora Advisors allocated the biggest weight to Utah Medical Products, Inc. (NASDAQ:UTMD), around 0.13% 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: Two Sigma Advisors. 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 Arrowstreet Capital).
Let's also examine hedge fund activity in other stocks similar to Utah Medical Products, Inc. (NASDAQ:UTMD). We will take a look at Midland States Bancorp, Inc. (NASDAQ:MSBI), The Manitowoc Company, Inc. (NYSE:MTW), Verona Pharma plc (NASDAQ:VRNA), Spero Therapeutics (NASDAQ:SPRO), Kimball Electronics Inc (NASDAQ:KE), Casper Sleep Inc. (NYSE:CSPR), and Genco Shipping & Trading Limited (NYSE:GNK). All of these stocks' market caps are closest to UTMD's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MSBI,10,9359,0 MTW,21,30600,2 VRNA,11,136859,7 SPRO,12,87035,4 KE,13,19173,1 CSPR,7,5253,5 GNK,11,142510,0 Average,12.1,61541,2.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.1 hedge funds with bullish positions and the average amount invested in these stocks was $62 million. That figure was $29 million in UTMD's case. The Manitowoc Company, Inc. (NYSE:MTW) is the most popular stock in this table. On the other hand Casper Sleep Inc. (NYSE:CSPR) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Utah Medical Products, Inc. (NASDAQ:UTMD) is even less popular than CSPR. Our overall hedge fund sentiment score for UTMD is 28.3. 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. Hedge funds dodged a bullet by taking a bearish stance towards UTMD. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd but managed to beat the market again by 16 percentage points. Unfortunately UTMD wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); UTMD investors were disappointed as the stock returned 9.5% since the end of the third quarter (through 12/2) 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 most of these stocks already outperformed the market so far in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
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