Do Hedge Funds Love Hutchinson Technology Incorporated (HTCH)?

Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. That’s why we pay special attention to hedge fund activity in these stocks.

Hutchinson Technology Incorporated (NASDAQ:HTCH) shareholders have witnessed a decrease in support from the world’s most elite money managers of late. At the end of this article we will also compare HTCH to other stocks including iCAD Inc (NASDAQ:ICAD), Galectin Therapeutics Inc. (NASDAQ:GALT), and Catalyst Biosciences Inc (NASDAQ:CBIO) to get a better sense of its popularity.

If you’d ask most shareholders, hedge funds are assumed to be slow, old investment vehicles of yesteryear. While there are over 8000 funds with their doors open at present, Our experts look at the masters of this group, around 700 funds. It is estimated that this group of investors oversee most of the hedge fund industry’s total asset base, and by keeping an eye on their top investments, Insider Monkey has brought to light several investment strategies that have historically exceeded the market. Insider Monkey’s small-cap hedge fund strategy beat the S&P 500 index by 12 percentage points annually for a decade in their back tests.

With all of this in mind, we’re going to view the recent action encompassing Hutchinson Technology Incorporated (NASDAQ:HTCH).

How have hedgies been trading Hutchinson Technology Incorporated (NASDAQ:HTCH)?

Heading into Q4, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from one quarter earlier. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Jim Simons’ Renaissance Technologies has the number one position in Hutchinson Technology Incorporated (NASDAQ:HTCH), worth close to $3 million, comprising less than 0.1%% of its total 13F portfolio. On Renaissance Technologies’s heels is Algert Coldiron Investors, led by Peter Algert and Kevin Coldiron, holding a $0.3 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish encompass Paul Solit’s Potomac Capital Management, John Overdeck and David Siegel’s Two Sigma Advisors and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.

Due to the fact that Hutchinson Technology Incorporated (NASDAQ:HTCH) has witnessed bearish sentiment from hedge fund managers, it’s easy to see that there lies a certain “tier” of fund managers that slashed their positions entirely in the third quarter. Interestingly, Jeffrey Moskowitz’s Harvey Partners dropped the biggest investment of the 700 funds watched by Insider Monkey, worth an estimated $1.1 million in stock, and Cliff Asness’s AQR Capital Management was right behind this move, as the fund dropped about $0.1 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds in the third quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Hutchinson Technology Incorporated (NASDAQ:HTCH) but similarly valued. We will take a look at iCAD Inc (NASDAQ:ICAD), Galectin Therapeutics Inc. (NASDAQ:GALT), Catalyst Biosciences Inc (NASDAQ:CBIO), and Bovie Medical Corporation (NYSEMKT:BVX). This group of stocks’ market caps match HTCH’s market cap.

As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $4 million in HTCH’s case. Catalyst Biosciences Inc (NASDAQ:CBIO) is the most popular stock in this table. On the other hand iCAD Inc (NASDAQ:ICAD) is the least popular one with only 4 bullish hedge fund positions. Hutchinson Technology Incorporated (NASDAQ:HTCH) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CBIO might be a better candidate to consider a long position.