Fund Exits $4 Million Healthcare Services Group Stake Amid 66% One-Year Rally
Key Points
Azarias Capital exited its entire stake in HCSG during the fourth quarter, selling off 253,363 shares worth $4.26 million.
The transaction accounted for 1.87% of Azarias’s 13F reportable assets under management.
The position was previously 1.7% of the fund’s AUM as of the prior quarter.
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On January 22, Azarias Capital Management sold out its entire stake in Healthcare Services Group (NASDAQ:HCSG), with the estimated transaction value of $4.26 million based on quarterly average pricing.
What happened
According to a SEC filing dated January 22, Azarias Capital Management reported selling all 253,363 shares of Healthcare Services Group during the fourth quarter. This move eliminated the fund’s exposure to the company, with the quarter-end position value dropping by $4.26 million.
What else to know
Top holdings after the quarter:
- NYSEMKT: SPY: $72.60 million (31.8% of AUM)
- NYSEMKT: URG: $19.39 million (8.5% of AUM)
- NASDAQ: EU: $10.25 million (4.5% of AUM)
- NYSE: NXE: $9.93 million (4.3% of AUM)
- NYSE: MAN: $8.62 million (3.8% of AUM)
As of January 22, HCSG shares were priced at $19.01, up 66.3% over one year and far outperforming the S&P 500 by 52.7 percentage points.
Company overview
| Metric | Value |
|---|---|
| Revenue (TTM) | $1.81 billion |
| Net Income (TTM) | $39.73 million |
| Market Capitalization | $1.38 billion |
| Price (as of 1/22/26) | $19.01 |
Company snapshot
Healthcare Services Group provides housekeeping, laundry, linen, facility maintenance, and dietary management services, with revenue primarily generated from service contracts with healthcare facilities. The company operates a service-based business model, earning fees through the management and operation of non-clinical departments in nursing homes, retirement complexes, rehabilitation centers, and hospitals. It serves institutional healthcare providers across the United States, targeting long-term care facilities and hospitals as its primary customer base.
What this transaction means for investors
Shares of Healthcare Services Group have climbed more than 66% over the past year, dramatically outperforming the broader market, and the sale here effectively locks in gains after a rapid rerating rather than signaling a breakdown in fundamentals.
Operationally, results have been solid. Third-quarter revenue rose 8.5% year over year to $464 million, exceeding expectations alongside earnings and cash flow, and was helped in part by one-time benefits tied to employee retention credits. Management struck a confident tone, with CEO Ted Wahl noting, “We have carried that positive momentum into the fourth quarter.”
But this fund’s broader portfolio might help explain the timing. Its largest positions skew toward index exposure and commodity-linked names, suggesting an emphasis on liquidity, cyclicality, and capital preservation. Fully exiting here simplifies exposure and reallocates capital from a stock that might have already delivered much of its near-term upside. For long-term investors, the takeaway isn’t bearishness: Strong execution and strong stock performance are different things, and when expectations reset quickly, trimming can be a risk-management decision, not a fundamental call.
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Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool recommends Healthcare Services Group. The Motley Fool has a disclosure policy.
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