Hedge Funds Aren’t Crazy About Utah Medical Products, Inc. (UTMD) Anymore

Investing in small cap stocks has historically been a way to outperform the market, as small cap companies typically grow faster on average than the blue chips. That outperformance comes with a price, however, as there are occasional periods of higher volatility. The time period between June 25 and the end of October was one of those periods, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by more than 14 percentage points. Given that the funds we track tend to have a disproportionate amount of their portfolios in smaller cap stocks, they have seen some volatility in their portfolios too. Actually, their moves are potentially one of the factors that contributed to this volatility. In this article, we use our extensive database of hedge fund holdings to find out what the smart money thinks of Utah Medical Products, Inc. (NASDAQ:UTMD).

Is Utah Medical Products, Inc. (NASDAQ:UTMD) a buy, sell, or hold? Prominent investors are in a pessimistic mood. The number of bullish hedge fund positions inched down by 1 lately. 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 Genie Energy Ltd (NYSE:GNE), Hallador Energy Co (NASDAQ:HNRG), and DSP Group, Inc. (NASDAQ:DSPG) to gather more data points.

To most market participants, hedge funds are assumed to be unimportant, old financial vehicles of years past. While there are greater than 8000 funds trading at present, Our experts choose to focus on the upper echelon of this club, around 700 funds. These money managers orchestrate bulk of all hedge funds’ total capital, and by watching their top equity investments, Insider Monkey has brought to light various investment strategies that have historically exceeded the market. Insider Monkey’s small-cap hedge fund strategy exceeded the S&P 500 index by 12 percentage points annually for a decade in their back tests.

Keeping this in mind, let’s view the latest action encompassing Utah Medical Products, Inc. (NASDAQ:UTMD).

What does the smart money think about Utah Medical Products, Inc. (NASDAQ:UTMD)?

Heading into Q4, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of -20% from one quarter earlier. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Brian Bares, Russell Mollen, and James Bradshaw’s Nine Ten Partners has the most valuable position in Utah Medical Products, Inc. (NASDAQ:UTMD), worth close to $14.6 million, corresponding to 6.6% of its total 13F portfolio. The second most bullish fund manager is Jim Simons of Renaissance Technologies, with a $5.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other professional money managers that are bullish include Chuck Royce’s Royce & Associates and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Wallace Capital Management. 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 none of the 700+ hedge funds tracked by Insider Monkey identified UTMD as a viable investment and initiated a position in the stock.

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. These stocks are Genie Energy Ltd (NYSE:GNE), Hallador Energy Co (NASDAQ:HNRG), DSP Group, Inc. (NASDAQ:DSPG), and Park City Group, Inc. (NYSEAMEX:PCYG). This group of stocks’ market valuations are similar to UTMD’s market valuation.

As you can see these stocks had an average of 6.75 hedge funds with bullish positions and the average amount invested in these stocks was $13 million. That figure was $22 million in UTMD’s case. Hallador Energy Co (NASDAQ:HNRG) is the most popular stock in this table, while Genie Energy Ltd (NYSE:GNE) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks, Utah Medical Products, Inc. (NASDAQ:UTMD) is even less popular than GNE. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.