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Is BioScrip Inc. (BIOS) Going to Burn These Hedge Funds?

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BioScrip Inc. (NASDAQ:BIOS) was in 16 hedge funds’ portfolio at the end of the first quarter of 2013. BIOS investors should pay attention to an increase in support from the world’s most elite money managers in recent months. There were 12 hedge funds in our database with BIOS holdings at the end of the previous quarter.

In today’s marketplace, there are tons of indicators investors can use to watch Mr. Market. Two of the most useful are hedge fund and insider trading activity. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the best fund managers can outclass the market by a healthy amount (see just how much).

Just as beneficial, optimistic insider trading sentiment is a second way to break down the stock market universe. Obviously, there are plenty of incentives for an upper level exec to get rid of shares of his or her company, but just one, very simple reason why they would initiate a purchase. Plenty of academic studies have demonstrated the market-beating potential of this method if “monkeys” understand what to do (learn more here).

With these “truths” under our belt, it’s important to take a gander at the latest action surrounding BioScrip Inc. (NASDAQ:BIOS).

What have hedge funds been doing with BioScrip Inc. (NASDAQ:BIOS)?

At the end of the first quarter, a total of 16 of the hedge funds we track were long in this stock, a change of 33% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their holdings significantly.

According to our comprehensive database, Phil Frohlich’s Prescott Group Capital Management had the biggest position in BioScrip Inc. (NASDAQ:BIOS), worth close to $12.6 million, accounting for 2.8% of its total 13F portfolio. Coming in second is Richard Driehaus of Driehaus Capital, with a $9.3 million position; 0.4% of its 13F portfolio is allocated to the stock. Other hedge funds that are bullish include Jim Simons’s Renaissance Technologies, James E. Flynn’s Deerfield Management and Bart Baum’s Ionic Capital Management.

As one would reasonably expect, some big names have been driving this bullishness. Bennett Lawrence Management, managed by Van Schreiber, initiated the most outsized position in BioScrip Inc. (NASDAQ:BIOS). Bennett Lawrence Management had 2 million invested in the company at the end of the quarter. Mike Vranos’s Ellington also initiated a $0.4 million position during the quarter. The other funds with brand new BIOS positions are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, John Overdeck and David Siegel’s Two Sigma Advisors, and Glenn Russell Dubin’s Highbridge Capital Management.

Insider trading activity in BioScrip Inc. (NASDAQ:BIOS)

Bullish insider trading is most useful when the primary stock in question has experienced transactions within the past 180 days. Over the last 180-day time period, BioScrip Inc. (NASDAQ:BIOS) has experienced zero unique insiders buying, and 2 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to BioScrip Inc. (NASDAQ:BIOS). These stocks are China Jo Jo Drugstores Inc (NASDAQ:CJJD), GNC Holdings Inc (NYSE:GNC), China Nepstar Chain Drugstore Ltd.(ADR) (NYSE:NPD), Rite Aid Corporation (NYSE:RAD), and PharMerica Corporation (NYSE:PMC). This group of stocks are in the drug stores industry and their market caps match BIOS’s market cap.

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