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Here is What Hedge Funds Think About ATI Physical Therapy Inc. (ATIP)

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Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the third quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of ATI Physical Therapy Inc. (NYSE:ATIP) based on that data.

Is ATI Physical Therapy Inc. (NYSE:ATIP) worth your attention right now? Money managers were cutting their exposure. The number of long hedge fund positions shrunk by 5 recently. ATI Physical Therapy Inc. (NYSE:ATIP) was in 25 hedge funds' portfolios at the end of the third quarter of 2021. The all time high for this statistic is 30. Our calculations also showed that ATIP isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 30 hedge funds in our database with ATIP holdings at the end of June.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind we're going to go over the latest hedge fund action encompassing ATI Physical Therapy Inc. (NYSE:ATIP).

Michael Weinstock - Monarch Alternative Capital
Michael Weinstock - Monarch Alternative Capital

Michael Weinstock of Monarch Alternative Capital

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

At third quarter's end, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from the second quarter of 2021. The graph below displays the number of hedge funds with bullish position in ATIP over the last 25 quarters. With hedge funds' capital changing hands, there exists an "upper tier" of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

More specifically, Knighthead Capital was the largest shareholder of ATI Physical Therapy Inc. (NYSE:ATIP) , with a stake worth $29.5 million reported as of the end of September. Trailing Knighthead Capital was Monarch Alternative Capital, which amassed a stake valued at $10.8 million. Lakewood Capital Management, Gratia Capital, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Gratia Capital allocated the biggest weight to ATI Physical Therapy Inc. (NYSE:ATIP) , around 4.14% of its 13F portfolio. Alden Global Capital is also relatively very bullish on the stock, setting aside 3.81 percent of its 13F equity portfolio to ATIP.

Because ATI Physical Therapy Inc. (NYSE:ATIP) has experienced declining sentiment from the entirety of the hedge funds we track, it's safe to say that there lies a certain "tier" of hedge funds that elected to cut their entire stakes heading into Q4. Interestingly, Eric W. Mandelblatt and Gaurav Kapadia's Soroban Capital Partners said goodbye to the biggest position of the "upper crust" of funds watched by Insider Monkey, valued at about $14.3 million in stock. Paul Marshall and Ian Wace's fund, Marshall Wace LLP, also dropped its stock, about $4.9 million worth. These transactions are important to note, as total hedge fund interest was cut by 5 funds heading into Q4.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as ATI Physical Therapy Inc. (NYSE:ATIP) but similarly valued. These stocks are Nyxoah SA (NASDAQ:NYXH), Great Southern Bancorp, Inc. (NASDAQ:GSBC), CVR Partners LP (NYSE:UAN), AnaptysBio, Inc. (NASDAQ:ANAB), Kelly Services, Inc. (NASDAQ:KELYA), ATN International, Inc. (NASDAQ:ATNI), and Zevia PBC (NYSE:ZVIA). All of these stocks' market caps match ATIP's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NYXH,4,17406,4 GSBC,9,25442,0 UAN,5,20456,2 ANAB,21,421478,1 KELYA,12,15276,3 ATNI,9,41408,1 ZVIA,9,18695,9 Average,9.9,80023,2.9 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.9 hedge funds with bullish positions and the average amount invested in these stocks was $80 million. That figure was $72 million in ATIP's case. AnaptysBio, Inc. (NASDAQ:ANAB) is the most popular stock in this table. On the other hand Nyxoah SA (NASDAQ:NYXH) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks ATI Physical Therapy Inc. (NYSE:ATIP) is more popular among hedge funds. Our overall hedge fund sentiment score for ATIP is 75. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 31.1% in 2021 through December 9th and still beat the market by 5.1 percentage points. Unfortunately ATIP wasn't nearly as popular as these 5 stocks and hedge funds that were betting on ATIP were disappointed as the stock returned -2.9% since the end of the third quarter (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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