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Should You Buy The Providence Service Corporation (PRSC)?

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Is The Providence Service Corporation (NASDAQ:PRSC) ready to rally soon? Hedge funds are betting on the stock. The number of bullish hedge fund bets rose by 2 in recent months.


If you’d ask most market participants, hedge funds are seen as slow, outdated financial vehicles of years past. While there are more than 8000 funds in operation at the moment, we at Insider Monkey hone in on the bigwigs of this club, about 450 funds. It is estimated that this group controls the majority of the smart money’s total capital, and by watching their top stock picks, we have uncovered a number of investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Equally as beneficial, bullish insider trading sentiment is a second way to break down the investments you’re interested in. There are a number of reasons for an insider to sell shares of his or her company, but only one, very clear reason why they would behave bullishly. Plenty of academic studies have demonstrated the valuable potential of this method if “monkeys” understand where to look (learn more here).

Now, it’s important to take a peek at the recent action encompassing The Providence Service Corporation (NASDAQ:PRSC).

Hedge fund activity in The Providence Service Corporation (NASDAQ:PRSC)

In preparation for this quarter, a total of 7 of the hedge funds we track held long positions in this stock, a change of 40% from the first quarter. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were upping their stakes significantly.

Of the funds we track, Coliseum Capital, managed by Christopher Shackelton and Adam Gray, holds the most valuable position in The Providence Service Corporation (NASDAQ:PRSC). Coliseum Capital has a $43.2 million position in the stock, comprising 24.7% of its 13F portfolio. Coming in second is Renaissance Technologies, managed by Jim Simons, which held a $10.4 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other peers that hold long positions include Peter Algert and Kevin Coldiron’s Algert Coldiron Investors, Israel Englander’s Millennium Management and D. E. Shaw’s D E Shaw.

Consequently, some big names have been driving this bullishness. Millennium Management, managed by Israel Englander, established the most outsized position in The Providence Service Corporation (NASDAQ:PRSC). Millennium Management had 1.7 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $0.3 million investment in the stock during the quarter.

What do corporate executives and insiders think about The Providence Service Corporation (NASDAQ:PRSC)?

Insider purchases made by high-level executives is particularly usable when the company in question has experienced transactions within the past half-year. Over the last half-year time frame, The Providence Service Corporation (NASDAQ:PRSC) has seen 1 unique insiders buying, and 3 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to The Providence Service Corporation (NASDAQ:PRSC). These stocks are Hanger Inc (NYSE:HGR), Cardionet Inc (NASDAQ:BEAT), IPC The Hospitalist Company Inc (NASDAQ:IPCM), Healthways, Inc. (NASDAQ:HWAY), and U.S. Physical Therapy, Inc. (NYSE:USPH). This group of stocks belong to the specialized health services industry and their market caps match PRSC’s market cap.

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