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Is U.S. Physical Therapy, Inc. (USPH) A Good Stock To Buy?

Abigail Fisher

The government requires hedge funds and wealthy investors that crossed the $100 million equity holdings threshold are required to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on December 31. We at Insider Monkey have made an extensive database of nearly 750 of those elite funds and prominent investors' filings. In this article, we analyze how these elite funds and prominent investors traded U.S. Physical Therapy, Inc. (NYSE:USPH) based on those filings.

U.S. Physical Therapy, Inc. (NYSE:USPH) investors should be aware of a decrease in enthusiasm from smart money lately. USPH was in 11 hedge funds' portfolios at the end of December. There were 12 hedge funds in our database with USPH positions at the end of the previous quarter. Our calculations also showed that USPH isn't among the 30 most popular stocks among hedge funds.

According to most shareholders, hedge funds are perceived as underperforming, outdated financial tools of years past. While there are more than 8000 funds with their doors open at present, We look at the upper echelon of this club, approximately 750 funds. These money managers shepherd most of all hedge funds' total capital, and by observing their unrivaled picks, Insider Monkey has unearthed many investment strategies that have historically outperformed the market. Insider Monkey's flagship hedge fund strategy outstripped the S&P 500 index by nearly 5 percentage points annually since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.

AlphaOne Capital Partners' Returns, AUM and Holdings

Let's view the latest hedge fund action encompassing U.S. Physical Therapy, Inc. (NYSE:USPH).

How are hedge funds trading U.S. Physical Therapy, Inc. (NYSE:USPH)?

Heading into the first quarter of 2019, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from one quarter earlier. On the other hand, there were a total of 8 hedge funds with a bullish position in USPH a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

USPH_apr2019

More specifically, Renaissance Technologies was the largest shareholder of U.S. Physical Therapy, Inc. (NYSE:USPH), with a stake worth $62 million reported as of the end of December. Trailing Renaissance Technologies was Royce & Associates, which amassed a stake valued at $13.7 million. Citadel Investment Group, AlphaOne Capital Partners, and Winton Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.

Judging by the fact that U.S. Physical Therapy, Inc. (NYSE:USPH) has witnessed bearish sentiment from the entirety of the hedge funds we track, it's easy to see that there lies a certain "tier" of hedgies that elected to cut their positions entirely by the end of the third quarter. Intriguingly, Benjamin A. Smith's Laurion Capital Management said goodbye to the largest position of the "upper crust" of funds tracked by Insider Monkey, totaling close to $6.8 million in stock, and Jeffrey Talpins's Element Capital Management was right behind this move, as the fund sold off about $4.3 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 1 funds by the end of the third quarter.

Let's now take a look at hedge fund activity in other stocks similar to U.S. Physical Therapy, Inc. (NYSE:USPH). We will take a look at Diamond Offshore Drilling Inc (NYSE:DO), Portola Pharmaceuticals Inc (NASDAQ:PTLA), HFF, Inc. (NYSE:HF), and SPX FLOW, Inc. (NYSE:FLOW). This group of stocks' market valuations match USPH's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DO,16,40456,-3 PTLA,14,241561,-9 HF,13,16140,3 FLOW,20,131015,7 Average,15.75,107293,-0.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $107 million. That figure was $88 million in USPH's case. SPX FLOW, Inc. (NYSE:FLOW) is the most popular stock in this table. On the other hand HFF, Inc. (NYSE:HF) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks U.S. Physical Therapy, Inc. (NYSE:USPH) is even less popular than HF. Hedge funds dodged a bullet by taking a bearish stance towards USPH. Our calculations showed that the top 15 most popular hedge fund stocks returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately USPH wasn't nearly as popular as these 15 stock (hedge fund sentiment was very bearish); USPH investors were disappointed as the stock returned 6.8% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.

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

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