Is Healthcare Services Group, Inc. (HCSG) A Good Stock To Buy?

As industrywide interest jumped, key hedge funds have jumped into Healthcare Services Group, Inc. (NASDAQ:HCSG) headfirst. Marshall Wace LLP, led by Paul Marshall and Ian Wace, established the most valuable position in Healthcare Services Group, Inc. (NASDAQ:HCSG). Ken Griffin’s Citadel Investment Group also made a $1.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Paul Tudor Jones’ Tudor Investment Corp, Matthew Hulsizer’s PEAK6 Capital Management, and Mike Vranos’ Ellington.

Let’s also examine hedge fund activity in other stocks similar to Healthcare Services Group, Inc. (NASDAQ:HCSG). These stocks are Landstar System, Inc. (NASDAQ:LSTR), Swift Transportation Co (NYSE:SWFT), Mentor Graphics Corp (NASDAQ:MENT), and Extended Stay America Inc (NYSE:STAY). This group of stocks’ market values are closest to HCSG’s market value.

As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $595 million. That figure was $23 million in HCSG’s case. Mentor Graphics Corp (NASDAQ:MENT) is the most popular stock in this table. On the other hand Landstar System, Inc. (NASDAQ:LSTR) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Healthcare Services Group, Inc. (NASDAQ:HCSG) is even less popular than LSTR. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

Disclosure: None