Is UFP Technologies, Inc. (UFPT) A Good Stock To Buy?

Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.

Is UFP Technologies, Inc. (NASDAQ:UFPT) a worthy investment now? Hedge funds are betting on the stock. The number of bullish hedge fund bets went up by 1 in recent months. UFP Technologies, Inc. (NASDAQ:UFPT) was in 7 hedge funds’ portfolios at the end of September. There were 6 hedge funds in our database with UFP Technologies, Inc. (NASDAQ:UFPT) 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 Immunomedics, Inc. (NASDAQ:IMMU), Oil-Dri Corporation of America (NYSE:ODC), and KVH Industries, Inc. (NASDAQ:KVHI) to gather more data points.

In the eyes of most shareholders, hedge funds are viewed as slow, outdated financial vehicles of yesteryear. While there are more than 8000 funds in operation at the moment, We look at the upper echelon of this club, around 700 funds. These hedge fund managers manage the majority of the smart money’s total capital, and by following their finest equity investments, Insider Monkey has formulated a number of investment strategies that have historically defeated the market. Insider Monkey’s small-cap hedge fund strategy defeated the S&P 500 index by 12 percentage points annually for a decade in their back tests.

Now, we’re going to review the key action surrounding UFP Technologies, Inc. (NASDAQ:UFPT).

What have hedge funds been doing with UFP Technologies, Inc. (NASDAQ:UFPT)?

At the end of the third quarter, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, an increase of 17% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Huber Capital Management, managed by Joe Huber, holds the largest position in UFP Technologies, Inc. (NASDAQ:UFPT). Huber Capital Management has a $11.6 million position in the stock, comprising 0.4% of its 13F portfolio. The second largest stake is held by Renaissance Technologies, with a $11.3 million position; less than 0.1% of its 13F portfolio is allocated to the company. Some other members of the smart money that are bullish consist of Thomas E. Lynch’s Mill Road Capital Management, Chuck Royce’s Royce & Associates and Jeffrey Bronchick’s Cove Street Capital.

Now, key money managers have jumped into UFP Technologies, Inc. (NASDAQ:UFPT) headfirst. Millennium Management, managed by Israel Englander, created the largest position in UFP Technologies, Inc. (NASDAQ:UFPT). Millennium Management had $0.2 million invested in the company at the end of the quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as UFP Technologies, Inc. (NASDAQ:UFPT) but similarly valued. These stocks are Immunomedics, Inc. (NASDAQ:IMMU), Oil-Dri Corporation of America (NYSE:ODC), KVH Industries, Inc. (NASDAQ:KVHI), and Cloud Peak Energy Inc. (NYSE:CLD). All of these stocks’ market caps are closest to UFP Technologies, Inc. (NASDAQ:UFPT)’s market cap.

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 $21 million. That figure was $35 million in UFP Technologies, Inc. (NASDAQ:UFPT)’s case. Cloud Peak Energy Inc. (NYSE:CLD) is the most popular stock in this table. On the other hand, Oil-Dri Corporation of America (NYSE:ODC) is the least popular one with only 4 bullish hedge fund positions. UFP Technologies, Inc. (NASDAQ:UFPT) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Cloud Peak Energy Inc. (NYSE:CLD) might be a better candidate to consider a long position.