Should You Buy Ultratech, Inc. (UTEK)?

Ultratech, Inc. (NASDAQ:UTEK) shareholders have witnessed an increase in hedge fund sentiment recently.

To most market participants, hedge funds are viewed as underperforming, old investment tools of yesteryear. While there are greater than 8000 funds with their doors open today, we at Insider Monkey look at the moguls of this club, around 450 funds. It is widely believed that this group oversees the majority of the smart money’s total asset base, and by paying attention to their top picks, we have brought to light a number of investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Just as beneficial, optimistic insider trading sentiment is another way to parse down the world of equities. Just as you’d expect, there are a number of incentives for an upper level exec to cut shares of his or her company, but only one, very obvious reason why they would buy. Plenty of empirical studies have demonstrated the market-beating potential of this method if you know what to do (learn more here).

Keeping this in mind, we’re going to take a gander at the recent action encompassing Ultratech, Inc. (NASDAQ:UTEK).

What does the smart money think about Ultratech, Inc. (NASDAQ:UTEK)?

In preparation for this quarter, a total of 23 of the hedge funds we track held long positions in this stock, a change of 28% from one quarter earlier. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were increasing their holdings considerably.

Of the funds we track, Adage Capital Management, managed by Phill Gross and Robert Atchinson, holds the most valuable position in Ultratech, Inc. (NASDAQ:UTEK). Adage Capital Management has a $48.1 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is Dorsal Capital Management, managed by Ryan Frick and Oliver Evans, which held a $31.6 million position; 4.3% of its 13F portfolio is allocated to the stock. Some other hedge funds that hold long positions include Clint Carlson’s Carlson Capital, Donald Chiboucis’s Columbus Circle Investors and Drew Cupps’s Cupps Capital Management.

As industrywide interest jumped, some big names were leading the bulls’ herd. Polar Capital, managed by Brian Ashford-Russell and Tim Woolley, established the most valuable position in Ultratech, Inc. (NASDAQ:UTEK). Polar Capital had 7.2 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also initiated a $5.3 million position during the quarter. The following funds were also among the new UTEK investors: Israel Englander’s Millennium Management, Matthew Tewksbury’s Stevens Capital Management, and Paul Tudor Jones’s Tudor Investment Corp.

Insider trading activity in Ultratech, Inc. (NASDAQ:UTEK)

Bullish insider trading is most useful when the company in question has experienced transactions within the past six months. Over the last half-year time frame, Ultratech, Inc. (NASDAQ:UTEK) has experienced zero unique insiders purchasing, and 6 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Ultratech, Inc. (NASDAQ:UTEK). These stocks are ATMI Inc (NASDAQ:ATMI), Veeco Instruments Inc. (NASDAQ:VECO), Entegris Inc (NASDAQ:ENTG), Kulicke and Soffa Industries Inc. (NASDAQ:KLIC), and Tessera Technologies, Inc. (NASDAQ:TSRA). All of these stocks are in the semiconductor equipment & materials industry and their market caps resemble UTEK’s market cap.