Is UTI A Good Stock To Buy Now?

The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Universal Technical Institute, Inc. (NYSE:UTI).

Is UTI a good stock to buy now? The smart money was in a bullish mood. The number of bullish hedge fund bets moved up by 2 in recent months. Universal Technical Institute, Inc. (NYSE:UTI) was in 14 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 15. Our calculations also showed that UTI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 12 hedge funds in our database with UTI holdings at the end of June.

Video: Watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Andre Perold of HighVista Strategies

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now we’re going to analyze the latest hedge fund action encompassing Universal Technical Institute, Inc. (NYSE:UTI).

Do Hedge Funds Think UTI Is A Good Stock To Buy Now?

At the end of September, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 17% from the second quarter of 2020. By comparison, 8 hedge funds held shares or bullish call options in UTI a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Park West Asset Management, managed by Peter S. Park, holds the biggest position in Universal Technical Institute, Inc. (NYSE:UTI). Park West Asset Management has a $15.5 million position in the stock, comprising 0.6% of its 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, holding a $9.8 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other members of the smart money that are bullish contain Chuck Royce’s Royce & Associates, Mark Broach’s Manatuck Hill Partners and Anand Parekh’s Alyeska Investment Group. In terms of the portfolio weights assigned to each position Manatuck Hill Partners allocated the biggest weight to Universal Technical Institute, Inc. (NYSE:UTI), around 1.12% of its 13F portfolio. Park West Asset Management is also relatively very bullish on the stock, dishing out 0.6 percent of its 13F equity portfolio to UTI.

With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves. Alyeska Investment Group, managed by Anand Parekh, established the most outsized position in Universal Technical Institute, Inc. (NYSE:UTI). Alyeska Investment Group had $2.1 million invested in the company at the end of the quarter. Cliff Asness’s AQR Capital Management also made a $0.9 million investment in the stock during the quarter. The other funds with brand new UTI positions are Andre F. Perold’s HighVista Strategies, Matthew Hulsizer’s PEAK6 Capital Management, and Ken Griffin’s Citadel Investment Group.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Universal Technical Institute, Inc. (NYSE:UTI) but similarly valued. We will take a look at Eton Pharmaceuticals, Inc. (NASDAQ:ETON), Grupo Supervielle S.A. (NYSE:SUPV), GP Strategies Corporation (NYSE:GPX), National Bankshares Inc. (NASDAQ:NKSH), Jiayin Group Inc. (NASDAQ:JFIN), Sesen Bio, Inc. (NASDAQ:SESN), and Big 5 Sporting Goods Corporation (NASDAQ:BGFV). All of these stocks’ market caps are similar to UTI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ETON 4 29256 1
SUPV 3 414 -1
GPX 9 49256 -2
NKSH 3 11806 1
JFIN 1 34 -2
SESN 6 7842 1
BGFV 9 18141 3
Average 5 16678 0.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $17 million. That figure was $40 million in UTI’s case. GP Strategies Corporation (NYSE:GPX) is the most popular stock in this table. On the other hand Jiayin Group Inc. (NASDAQ:JFIN) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Universal Technical Institute, Inc. (NYSE:UTI) is more popular among hedge funds. Our overall hedge fund sentiment score for UTI is 85. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks returned 32.9% in 2020 through December 8th but still managed to beat the market by 16.2 percentage points. Hedge funds were also right about betting on UTI as the stock returned 23% since the end of September (through 12/8) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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