5 Stocks to Buy Now According to Steve Pei’s Gratia Capital

In this article, we discuss the 5 stocks to buy now according to Steve Pei’s Gratia Capital. If you want to read our detailed analysis of Pei’s history and hedge fund performance, go directly to the 10 Stocks to Buy Now According to Steve Pei’s Gratia Capital.

5. ATI Physical Therapy, Inc. (NYSE:ATIP)

Gratia Capital’s Stake Value: $4.96 million

 Percentage of Gratia Capital’s 13F Portfolio: 4.14%

 Number of Hedge Fund Holders: 25

ATI Physical Therapy, Inc. (NYSE:ATIP) is an Illinois-based physical therapy provider in North America. The firm’s rehabilitation services are recognized nationally and it has around 860 locations in the U.S. On November 18, the company announced that it has taken over Excel-R-ation Physical Therapy which strengthens its position in Michigan.

CJS Securities analyst Larry Solow downgraded the rating from Outperform to Market Perform on ATI Physical Therapy, Inc. (NYSE:ATIP) stock with a $6 price target.

As per the database of Insider Monkey that tracks 867 hedge funds, 25 funds held stakes in ATI Physical Therapy, Inc. (NYSE:ATIP) worth $71.58 million in the third quarter.

1 Main Capital mentioned ATI Physical Therapy, Inc. (NYSE:ATIP) in its third-quarter investor letter. Here is what the firm said:

“During the period, we also sold our opportunistic ATIP position soon after our Q2 letter went out, when the company’s results and outlook were significantly lower than expected, without a clear explanation for how the issues would be resolved.

Specifically, it sounds like the company cut into muscle when it took costs out during COVID, alienating its therapist base. In turn, many therapists are departing for other opportunities, leaving ATIP understaffed and unable to keep up with demand. When trying to replace these staff members, ATIP in many cases has had to offer above-market wages due to its poor reputation, meaning that its future revenues will come at lower margins than in the past.

A deteriorating margin would be a problem even for an unleveraged company. Unfortunately, ATIP also has a debt problem it must deal with since EBITDA is so much lower than it was prior to COVID. The most frustrating part of these developments is that the company appears to have purposely delayed disclosing them to investors until immediately after its de-SPAC was completed.

While I am frustrated by the way this investment played out, I can’t change what happens, only what I do about it. So, we exited our entire position at $1.16 per warrant. Today, they trade for less than $0.50 each.”