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U.S. Physical Therapy, Inc. (USPH): Are Hedge Funds Right About This Stock?

Nina Todic

Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Amazon, Facebook and Alibaba, have not done well in October due to various reasons. Nevertheless, the data show elite investors' consensus picks have done well on average over the long-term. The top 30 S&P 500 stocks among hedge funds at the end of September 2018 returned an average of 6.7% through November 15th whereas the S&P 500 Index ETF gained only 2.6% during the same period. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at U.S. Physical Therapy, Inc. (NYSE:USPH) from the perspective of those elite funds.

U.S. Physical Therapy, Inc. (NYSE:USPH) has seen an increase in activity from the world's largest hedge funds recently. USPH was in 12 hedge funds' portfolios at the end of the third quarter of 2018. There were 10 hedge funds in our database with USPH holdings at the end of the previous quarter. Our calculations also showed that usph isn't among the 30 most popular stocks among hedge funds.

To the average investor there are plenty of gauges stock market investors employ to assess their stock investments. Two of the most underrated gauges are hedge fund and insider trading interest. We have shown that, historically, those who follow the top picks of the elite money managers can outpace their index-focused peers by a healthy amount (see the details here).

Chuck Royce

Let's take a peek at the latest hedge fund action regarding U.S. Physical Therapy, Inc. (NYSE:USPH).

How have hedgies been trading U.S. Physical Therapy, Inc. (NYSE:USPH)?

Heading into the fourth quarter of 2018, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards USPH over the last 13 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with USPH Positions

The largest stake in U.S. Physical Therapy, Inc. (NYSE:USPH) was held by Renaissance Technologies, which reported holding $74.4 million worth of stock at the end of September. It was followed by Royce & Associates with a $23.4 million position. Other investors bullish on the company included Laurion Capital Management, AlphaOne Capital Partners, and Citadel Investment Group.

As industrywide interest jumped, key money managers have jumped into U.S. Physical Therapy, Inc. (NYSE:USPH) headfirst. Element Capital Management, managed by Jeffrey Talpins, initiated the most valuable position in U.S. Physical Therapy, Inc. (NYSE:USPH). Element Capital Management had $4.3 million invested in the company at the end of the quarter. D. E. Shaw's D E Shaw also made a $0.2 million investment in the stock during the quarter.

Let's go over hedge fund activity in other stocks similar to U.S. Physical Therapy, Inc. (NYSE:USPH). These stocks are WSFS Financial Corporation (NASDAQ:WSFS), Gran Tierra Energy Inc. (NYSE:GTE), NMI Holdings Inc (NASDAQ:NMIH), and PIMCO Corporate&Income Opportunity Fund (NYSE:PTY). All of these stocks' market caps are closest to USPH's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WSFS,10,106803,-2 GTE,16,394926,0 NMIH,12,196799,-3 PTY,2,627,-1 Average,10,174789,-1.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $175 million. That figure was $124 million in USPH's case. Gran Tierra Energy Inc. (NYSE:GTE) is the most popular stock in this table. On the other hand PIMCO Corporate&Income Opportunity Fund (NYSE:PTY) is the least popular one with only 2 bullish hedge fund positions. U.S. Physical Therapy, Inc. (NYSE:USPH) 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 GTE might be a better candidate to consider a long position.

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

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