Why Providence Service Corp (PRSC) Stock is a Compelling Investment Case

Summers Value Partners recently released its Q3 2020 Investor Letter, a copy of which you can download here. The fund posted a return of -1.2% in the first nine months of 2020, outperforming its benchmark, the Russell 2000 Index which returned -9.6% in the same period. You should check out Summers Value Partners’ top 5 stock picks for investors to buy right now, which could be the biggest winners this year.

In the said letter, Summers Value Partners highlighted a few stocks and Providence Service Corp (NASDAQ:PRSC) is one of them. Providence Service Corp (NASDAQ:PRSC) engages in the provision of home and community-based social services and non-emergency transportation services. Year-to-date, Providence Service Corp (NASDAQ:PRSC) stock gained 77.3% and on October 15th it had a closing price of $104.34. Here is what Summers Value Partners said:

“We initiated a position in Providence Services Corporation in May after learning about the positive changes occurring at the company. Providence is the largest provider of non-emergency medical transportation (NEMT) services to patients nationwide with an over 40% market share. As a logistics platform, the business is asset light and lacks capital intensity. Providence also owns a minority interest in Matrix Medical, which we believe is worth roughly $150 million and could be monetized in the near term.

Providence has a new management team led by CEO Dan Greenleaf. Mr. Greenleaf has a long track record of success in the healthcare services industry. We initiated our position on the thesis that Mr. Greenleaf and his new team were positioning the company for improved operating performance after a period of poor management. The company also featured a pristine balance sheet with no debt, a history of free cash flow generation and virtually no Wall Street coverage. We believe that Providence is worth $150- 175 per share and will appreciate on the back of improved operating performance combined with smart capital deployment.”

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In Q1 2020, the number of bullish hedge fund positions on Providence Service Corp (NASDAQ:PRSC) stock decreased by about 27% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t believe in PRSC’s growth potential. Our calculations showed that Providence Service Corp (NASDAQ:PRSC) isn’t ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

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