Is OPCH Stock A Buy or Sell?

After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of December 31st. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Option Care Health, Inc. (NASDAQ:OPCH).

Is OPCH stock a buy? Option Care Health, Inc. (NASDAQ:OPCH) investors should be aware of an increase in enthusiasm from smart money of late. Option Care Health, Inc. (NASDAQ:OPCH) was in 24 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 23. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 18 hedge funds in our database with OPCH holdings at the end of September. Our calculations also showed that OPCH isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

According to most market participants, hedge funds are seen as worthless, outdated financial tools of yesteryear. While there are more than 8000 funds in operation today, Our researchers hone in on the upper echelon of this group, about 850 funds. These hedge fund managers handle the majority of all hedge funds’ total capital, and by tracking their first-class stock picks, Insider Monkey has determined numerous investment strategies that have historically surpassed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 197% since March 2017 (through March 2021) and beat the S&P 500 Index by 124 percentage points. You can download a sample issue of this newsletter on our website .

Chuck Royce of Royce & Associates

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now we’re going to take a gander at the fresh hedge fund action surrounding Option Care Health, Inc. (NASDAQ:OPCH).

Do Hedge Funds Think OPCH Is A Good Stock To Buy Now?

At the end of December, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from the third quarter of 2020. The graph below displays the number of hedge funds with bullish position in OPCH over the last 22 quarters. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

More specifically, Park West Asset Management was the largest shareholder of Option Care Health, Inc. (NASDAQ:OPCH), with a stake worth $98.6 million reported as of the end of December. Trailing Park West Asset Management was Polar Capital, which amassed a stake valued at $35 million. Royce & Associates, Millennium Management, and CaaS Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Pinz Capital allocated the biggest weight to Option Care Health, Inc. (NASDAQ:OPCH), around 2.5% of its 13F portfolio. Park West Asset Management is also relatively very bullish on the stock, earmarking 2.04 percent of its 13F equity portfolio to OPCH.

With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. CaaS Capital, managed by Frank Fu, established the biggest position in Option Care Health, Inc. (NASDAQ:OPCH). CaaS Capital had $13.7 million invested in the company at the end of the quarter. Stanley Druckenmiller’s Duquesne Capital also initiated a $6.1 million position during the quarter. The following funds were also among the new OPCH investors: Matthew L Pinz’s Pinz Capital, Jeffrey Talpins’s Element Capital Management, and John Overdeck and David Siegel’s Two Sigma Advisors.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Option Care Health, Inc. (NASDAQ:OPCH) but similarly valued. These stocks are Momo Inc (NASDAQ:MOMO), GATX Corporation (NYSE:GATX), H&R Block, Inc. (NYSE:HRB), FirstCash, Inc. (NASDAQ:FCFS), Rogers Corporation (NYSE:ROG), Six Flags Entertainment Corp (NYSE:SIX), and Energizer Holdings, Inc. (NYSE:ENR). This group of stocks’ market values match OPCH’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.3 hedge funds with bullish positions and the average amount invested in these stocks was $312 million. That figure was $248 million in OPCH’s case. Six Flags Entertainment Corp (NYSE:SIX) is the most popular stock in this table. On the other hand GATX Corporation (NYSE:GATX) is the least popular one with only 12 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 60.7. 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. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Hedge funds were also right about betting on OPCH as the stock returned 23.7% since the end of Q4 (through 4/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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

Follow Insider Monkey on Twitter