The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. Hedge funds’ consensus stock picks performed spectacularly over the last 3 years, but 2022 hasn’t been kind to hedge funds. In this article we look at how hedge funds traded Option Care Health, Inc. (NASDAQ:OPCH) and determine whether the smart money was really smart about this stock.
Option Care Health, Inc. (NASDAQ:OPCH) was in 30 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 31. OPCH investors should pay attention to a decrease in enthusiasm from smart money recently. There were 31 hedge funds in our database with OPCH positions at the end of the second quarter. Our calculations also showed that OPCH isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we’re going to take a gander at the fresh hedge fund action encompassing Option Care Health, Inc. (NASDAQ:OPCH).
Do Hedge Funds Think OPCH Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of -3% from one quarter earlier. By comparison, 18 hedge funds held shares or bullish call options in OPCH a year ago. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
The largest stake in Option Care Health, Inc. (NASDAQ:OPCH) was held by Park West Asset Management, which reported holding $146.6 million worth of stock at the end of September. It was followed by Polar Capital with a $49.3 million position. Other investors bullish on the company included Castle Hook Partners, Duquesne Capital, and Millennium Management. In terms of the portfolio weights assigned to each position Park West Asset Management allocated the biggest weight to Option Care Health, Inc. (NASDAQ:OPCH), around 3.57% of its 13F portfolio. Castle Hook Partners is also relatively very bullish on the stock, setting aside 1.25 percent of its 13F equity portfolio to OPCH.
Judging by the fact that Option Care Health, Inc. (NASDAQ:OPCH) has faced falling interest from the entirety of the hedge funds we track, logic holds that there was a specific group of fund managers that decided to sell off their entire stakes in the third quarter. Intriguingly, Doug Silverman and Alexander Klabin’s Senator Investment Group sold off the biggest position of the “upper crust” of funds monitored by Insider Monkey, worth an estimated $32.8 million in stock. Christian Leone’s fund, Luxor Capital Group, also cut its stock, about $7.3 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 1 funds in the third quarter.
Let’s now review hedge fund activity in other stocks similar to Option Care Health, Inc. (NASDAQ:OPCH). We will take a look at Tegna Inc (NYSE:TGNA), Coursera, Inc. (NYSE:COUR), American Eagle Outfitters Inc. (NYSE:AEO), Ortho Clinical Diagnostics Holdings plc (NASDAQ:OCDX), Fisker Inc. (NYSE:FSR), Qualys Inc (NASDAQ:QLYS), and Healthcare Realty Trust Inc (NYSE:HR). This group of stocks’ market valuations match OPCH’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TGNA | 37 | 420370 | 19 |
| COUR | 25 | 173727 | 14 |
| AEO | 24 | 1208509 | -17 |
| OCDX | 30 | 272834 | 9 |
| FSR | 15 | 228103 | -1 |
| QLYS | 18 | 220919 | -2 |
| HR | 18 | 210905 | -1 |
| Average | 23.9 | 390767 | 3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.9 hedge funds with bullish positions and the average amount invested in these stocks was $391 million. That figure was $362 million in OPCH’s case. Tegna Inc (NYSE:TGNA) is the most popular stock in this table. On the other hand Fisker Inc. (NYSE:FSR) is the least popular one with only 15 bullish hedge fund positions. Option Care Health, Inc. (NASDAQ:OPCH) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for OPCH is 67.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately, OPCH wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on OPCH were disappointed as the stock returned -3.7% since the end of September (through 1/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as all of these stocks already outperformed the market since 2019.
Follow Option Care Health Inc. (NASDAQ:OPCH)
Follow Option Care Health Inc. (NASDAQ:OPCH)
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Disclosure: None. This article was originally published at Insider Monkey.
