Three companies have recently been the subject of bullish moves by hedge funds. Let us take a look at what makes these companies seem undervalued to hedgies.
According to a recent filing with the SEC, Christopher Sackelton and Adam Grey‘s Coliseum Capital has acquired some 2.74 million shares of Universal Technical Institute, Inc. (NYSE:UTI) with its affiliated funds, amassing about 11.3% of the $100 million education company’s outstanding stock.
The company has hit a rough patch this year, first with the subpoena from U.S. Attorney Office in July when it was asked to provide documents related to its compliance with the “90/10” rule. Moreover, Universal’s net loss per share of $0.41 for the fourth fiscal quarter, ended September 30, was much worse than the expected loss of $0.03, while quarterly revenues of $90.7 million were also $1.78 million below expectations. So far this year Universal Technical Institute, Inc. (NYSE:UTI)’s stock price has slumped by nearly 60%, which is significantly larger than the average dip of over 22% experienced by the educational services industry. Alexander Medina Seaver’s Stadium Capital Management and Jim Simons’ Renaissance Technologies are the two largest stockholders of Universal within our database with respective holdings of 3.61 million shares and 822,700 shares as of September 30.
At Insider Monkey, we don’t just track the latest moves of hedge funds. We are, in fact, more interested in their 13F filings, which we use to determine the top 15 small-cap stocks held by the funds we track. We gather and share this information based on 16 years of research which showed that these 15 most popular small-cap picks have a great potential to outperform the market, beating the S&P 500 Total Return Index by nearly one percentage point per month in backtests, and easily beating the most popular large-cap picks of funds, which nonetheless get the majority of their collective capital. Why pay fees to invest in both the best and worst ideas of a particular hedge fund when you can simply mimic only the very best ideas of the best fund managers on your own? Since the beginning of forward testing in August 2012, the Insider Monkey small-cap strategy has outperformed the market every year, returning 102%, nearly 2 times above the S&P 500 during the same period (see more details).
Meanwhile, James E. Flynn‘s Deerfield Management has recently hiked its stake in Vanda Pharmaceuticals Inc. (NASDAQ:VNDA) by about 20% to 5.98 million shares. The holding represents about 14% of the $351.75 million biopharmaceutical stock’s outstanding shares. Deerfield has held a stake in Vanda since the third quarter of 2013.
Since the start of this year Vanda Pharmaceuticals Inc. (NASDAQ:VNDA)’s stock price has depreciated by more than 41%. As of November-end the short interest in the company stood at about 21% of its outstanding float. After Deerfield, William Leland Edwards‘ Palo Alto Investors is the second-largest stockholder of Vanda Pharmaceuticals Inc. (NASDAQ:VNDA) within our database holding around 4 million shares.