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Should I Avoid Omnicell, Inc. (OMCL)?

·5 min read

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. Insider Monkey finished processing 866 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards Omnicell, Inc. (NASDAQ:OMCL).

Is Omnicell, Inc. (NASDAQ:OMCL) worth your attention right now? Money managers were becoming less confident. The number of bullish hedge fund positions shrunk by 1 in recent months. Omnicell, Inc. (NASDAQ:OMCL) was in 19 hedge funds' portfolios at the end of March. The all time high for this statistic is 22. Our calculations also showed that OMCL isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 20 hedge funds in our database with OMCL holdings at the end of December.

In the financial world there are several gauges investors employ to evaluate their stock investments. A pair of the best gauges are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the best money managers can trounce their index-focused peers by a very impressive margin (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

AQR CAPITAL MANAGEMENT
AQR CAPITAL MANAGEMENT

Cliff Asness of AQR Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery 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. 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 homepage. Now we're going to go over the new hedge fund action regarding Omnicell, Inc. (NASDAQ:OMCL).

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

At first quarter's end, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -5% from one quarter earlier. On the other hand, there were a total of 17 hedge funds with a bullish position in OMCL a year ago. With hedgies' sentiment swirling, there exists a select group of key hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).

Is OMCL A Good Stock To Buy?
Is OMCL A Good Stock To Buy?

Among these funds, Fisher Asset Management held the most valuable stake in Omnicell, Inc. (NASDAQ:OMCL), which was worth $31 million at the end of the fourth quarter. On the second spot was Alpine Associates which amassed $9.4 million worth of shares. Impax Asset Management, McKinley Capital Management, and AQR Capital Management 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 Sciencast Management allocated the biggest weight to Omnicell, Inc. (NASDAQ:OMCL), around 0.45% of its 13F portfolio. Alpine Associates is also relatively very bullish on the stock, setting aside 0.25 percent of its 13F equity portfolio to OMCL.

Seeing as Omnicell, Inc. (NASDAQ:OMCL) has experienced a decline in interest from the aggregate hedge fund industry, we can see that there exists a select few funds that decided to sell off their positions entirely last quarter. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital cut the biggest investment of the "upper crust" of funds followed by Insider Monkey, comprising about $35.6 million in stock. Frank Brosens's fund, Taconic Capital, also said goodbye to its stock, about $14.9 million worth. These moves are interesting, as aggregate hedge fund interest fell by 1 funds last quarter.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Omnicell, Inc. (NASDAQ:OMCL) but similarly valued. These stocks are South State Corporation (NASDAQ:SSB), Valley National Bancorp (NYSE:VLY), Q2 Holdings Inc (NYSE:QTWO), Alliance Data Systems Corporation (NYSE:ADS), Alteryx, Inc. (NYSE:AYX), Iridium Communications Inc. (NASDAQ:IRDM), and Tenet Healthcare Corp (NYSE:THC). This group of stocks' market valuations are similar to OMCL's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SSB,24,252240,7 VLY,17,87726,0 QTWO,26,248123,3 ADS,36,1420743,4 AYX,35,749927,-7 IRDM,22,605499,4 THC,39,1515145,5 Average,28.4,697058,2.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.4 hedge funds with bullish positions and the average amount invested in these stocks was $697 million. That figure was $73 million in OMCL's case. Tenet Healthcare Corp (NYSE:THC) is the most popular stock in this table. On the other hand Valley National Bancorp (NYSE:VLY) is the least popular one with only 17 bullish hedge fund positions. Omnicell, Inc. (NASDAQ:OMCL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for OMCL is 34.5. 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 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 23.8% in 2021 through July 16th and beat the market by 7.7 percentage points. A small number of hedge funds were also right about betting on OMCL, though not to the same extent, as the stock returned 16.2% since the end of Q1 (through July 16th) and outperformed the market.

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