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Did Hedge Funds Drop The Ball On Ultra Clean Holdings Inc (UCTT) ?

At Insider Monkey, we pore over the filings of nearly 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of March 31. In this article, we will use that wealth of knowledge to determine whether or not Ultra Clean Holdings Inc (NASDAQ:UCTT) makes for a good investment right now.

Ultra Clean Holdings Inc (NASDAQ:UCTT) was in 9 hedge funds’ portfolios at the end of March. UCTT shareholders have witnessed a decrease in enthusiasm from smart money of late. There were 10 hedge funds in our database with UCTT holdings at the end of the previous quarter. Our calculations also showed that uctt isn’t among the 30 most popular stocks among hedge funds.

To most stock holders, hedge funds are seen as worthless, old investment tools of yesteryear. While there are greater than 8000 funds trading at present, Our experts choose to focus on the upper echelon of this club, around 750 funds. These investment experts have their hands on bulk of the hedge fund industry’s total asset base, and by watching their inimitable equity investments, Insider Monkey has deciphered several investment strategies that have historically outpaced the broader indices. Insider Monkey’s flagship hedge fund strategy outrun the S&P 500 index by around 5 percentage points per year since its inception in May 2014 through June 18th. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 28.2% since February 2017 (through June 18th) even though the market was up nearly 30% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 8.2% in a month whereas our long picks outperformed the market by 2.5 percentage points in this volatile 5 week period (our long picks also beat the market by 15 percentage points so far this year).

Chuck Royce

Let’s take a glance at the latest hedge fund action surrounding Ultra Clean Holdings Inc (NASDAQ:UCTT).

What have hedge funds been doing with Ultra Clean Holdings Inc (NASDAQ:UCTT)?

Heading into the second quarter of 2019, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -10% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards UCTT over the last 15 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with UCTT Positions

Of the funds tracked by Insider Monkey, Divisar Capital, managed by Steven Baughman, holds the largest position in Ultra Clean Holdings Inc (NASDAQ:UCTT). Divisar Capital has a $23.1 million position in the stock, comprising 7.5% of its 13F portfolio. Coming in second is Royce & Associates, led by Chuck Royce, holding a $14.7 million position; 0.1% of its 13F portfolio is allocated to the company. Some other peers that hold long positions contain Jim Simons’s Renaissance Technologies, Ken Griffin’s Citadel Investment Group and Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s GRT Capital Partners.

Seeing as Ultra Clean Holdings Inc (NASDAQ:UCTT) has witnessed declining sentiment from hedge fund managers, logic holds that there exists a select few money managers that decided to sell off their full holdings in the third quarter. It’s worth mentioning that Eric Singer’s VIEX Capital Advisors said goodbye to the largest stake of the “upper crust” of funds tracked by Insider Monkey, worth about $6.7 million in stock. Israel Englander’s fund, Millennium Management, also dropped its stock, about $0.1 million worth. These transactions are interesting, as total hedge fund interest fell by 1 funds in the third quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Ultra Clean Holdings Inc (NASDAQ:UCTT) but similarly valued. These stocks are ImmunoGen, Inc. (NASDAQ:IMGN), TCR2 Therapeutics Inc. (NASDAQ:TCRR), PDF Solutions, Inc. (NASDAQ:PDFS), and Bar Harbor Bankshares (NYSEAMEX:BHB). All of these stocks’ market caps are closest to UCTT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IMGN 16 69185 0
TCRR 5 39383 5
PDFS 9 45669 -2
BHB 3 16489 0
Average 8.25 42682 0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 8.25 hedge funds with bullish positions and the average amount invested in these stocks was $43 million. That figure was $46 million in UCTT’s case. ImmunoGen, Inc. (NASDAQ:IMGN) is the most popular stock in this table. On the other hand Bar Harbor Bankshares (NYSEAMEX:BHB) is the least popular one with only 3 bullish hedge fund positions. Ultra Clean Holdings Inc (NASDAQ:UCTT) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Hedge funds were also right about betting on UCTT as the stock returned 32.4% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.

Disclosure: None. This article was originally published at Insider Monkey.

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