Is Universal Technical Institute, Inc. (UTI) Going to Burn These Hedge Funds?

You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund investors like Carl Icahn and George Soros hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.

Universal Technical Institute, Inc. (NYSE:UTI) shareholders have witnessed a decrease in support from the world’s most successful money managers recently. There were 11 hedge funds in our database with UTI positions at the end of the previous quarter. 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 JRjr33 Inc (NYSEMKT:JRJR), Intersections Inc. (NASDAQ:INTX), and Harris & Harris Group, Inc. (NASDAQ:TINY) to gather more data points.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.

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Keeping this in mind, let’s take a glance at the fresh action encompassing Universal Technical Institute, Inc. (NYSE:UTI).

How are hedge funds trading Universal Technical Institute, Inc. (NYSE:UTI)?

At the end of the third quarter, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a drop of 18% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards UTI over the last 5 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Alexander Medina Seaver’s Stadium Capital Management has the biggest position in Universal Technical Institute, Inc. (NYSE:UTI), worth close to $6.4 million, accounting for 2.1% of its total 13F portfolio. The second most bullish fund manager is Christopher Shackelton and Adam Gray of Coliseum Capital, with a $6.4 million position; 2.2% of its 13F portfolio is allocated to the company. Other professional money managers that are bullish contain Renaissance Technologies, one of the largest hedge funds in the world, Chuck Royce’s Royce & Associates and Mario Gabelli’s GAMCO Investors. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Now that we’ve mentioned the most bullish investors, let’s also take a look at some funds that got rid of their entire stakes in the stock during the third quarter. At the top of the heap, Israel Englander’s Millennium Management got rid of the largest position of all the investors followed by Insider Monkey, valued at close to $0.4 million in stock, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners was right behind this move, as the fund said goodbye to about $0 million worth of shares.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Universal Technical Institute, Inc. (NYSE:UTI) but similarly valued. We will take a look at JRjr33 Inc (NYSEMKT:JRJR), Intersections Inc. (NASDAQ:INTX), Harris & Harris Group, Inc. (NASDAQ:TINY), and Histogenics Corp (NASDAQ:HSGX). This group of stocks’ market valuations resemble UTI’s market valuation.

As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $7 million. That figure was $17 million in UTI’s case. Histogenics Corp (NASDAQ:HSGX) is the most popular stock in this table. On the other hand Harris & Harris Group, Inc. (NASDAQ:TINY) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Universal Technical Institute, Inc. (NYSE:UTI) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

Disclosure: None