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Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Omega Healthcare Investors Inc (NYSE:OHI).
Omega Healthcare Investors Inc (NYSE:OHI) investors should pay attention to a decrease in hedge fund sentiment lately. OHI was in 17 hedge funds' portfolios at the end of March. There were 18 hedge funds in our database with OHI positions at the end of the previous quarter. Our calculations also showed that OHI isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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Arthur B Cohen and Joseph Healey of Healthcor Management LP[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let's take a gander at the key hedge fund action surrounding Omega Healthcare Investors Inc (NYSE:OHI).
How are hedge funds trading Omega Healthcare Investors Inc (NYSE:OHI)?
Heading into the second quarter of 2020, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from one quarter earlier. By comparison, 13 hedge funds held shares or bullish call options in OHI a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey's hedge fund database, Arthur B Cohen and Joseph Healey's Healthcor Management LP has the biggest position in Omega Healthcare Investors Inc (NYSE:OHI), worth close to $54.1 million, comprising 2.3% of its total 13F portfolio. Coming in second is Renaissance Technologies, with a $51.7 million position; 0.1% of its 13F portfolio is allocated to the company. Other peers with similar optimism consist of John Overdeck and David Siegel's Two Sigma Advisors, D. E. Shaw's D E Shaw and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital. In terms of the portfolio weights assigned to each position Healthcor Management LP allocated the biggest weight to Omega Healthcare Investors Inc (NYSE:OHI), around 2.31% of its 13F portfolio. McKinley Capital Management is also relatively very bullish on the stock, earmarking 0.09 percent of its 13F equity portfolio to OHI.
Since Omega Healthcare Investors Inc (NYSE:OHI) has experienced falling interest from the entirety of the hedge funds we track, it's easy to see that there was a specific group of funds who sold off their entire stakes in the first quarter. Interestingly, Richard SchimeláandáLawrence Sapanski's Cinctive Capital Management sold off the biggest investment of the 750 funds watched by Insider Monkey, totaling close to $4.8 million in stock, and Steve Cohen's Point72 Asset Management was right behind this move, as the fund sold off about $4.5 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 1 funds in the first quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Omega Healthcare Investors Inc (NYSE:OHI) but similarly valued. These stocks are 10x Genomics, Inc. (NASDAQ:TXG), PulteGroup, Inc. (NYSE:PHM), GCI Liberty, Inc. (NASDAQ:GLIBA), and BanColombia S.A. (NYSE:CIB). This group of stocks' market caps are closest to OHI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TXG,20,166530,8 PHM,36,465706,2 GLIBA,49,1833581,2 CIB,11,86861,-3 Average,29,638170,2.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 29 hedge funds with bullish positions and the average amount invested in these stocks was $638 million. That figure was $153 million in OHI's case. GCI Liberty, Inc. (NASDAQ:GLIBA) is the most popular stock in this table. On the other hand BanColombia S.A. (NYSE:CIB) is the least popular one with only 11 bullish hedge fund positions. Omega Healthcare Investors Inc (NYSE:OHI) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd and surpassed the market by 15.9 percentage points. Unfortunately OHI wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); OHI investors were disappointed as the stock returned 16.5% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.