Hedge funds degrade on Omega Healthcare Investors Inc (OHI)
As the market is dragged down by short-term sentiment influenced by the accommodative US interest rate environment, virus news and stimulus spending, many smart investors are starting to be cautious about the current uptrend since March 2020 and to hedge or reduce many of their long positions. Some fund managers bet on the Dow Jones reaching 40,000 to generate solid returns. However, as we know, big investors usually buy stocks with strong fundamentals that can generate gains in both bullish and bearish markets, which is why we believe we can profit from their imitation. In this article, we’ll take a look at the smart money sentiment surrounding Omega Healthcare Investors Inc (NYSE: OHI).
East Omega Healthcare Investors Inc (NYSE: OHI) a good investment right now? The hedge funds were in a bearish mood. The number of long bets on hedge funds has fallen by 5 recently. Omega Healthcare Investors Inc (NYSE: OHI) was listed in 20 hedge fund portfolios at the end of June. The historical high for this statistic is 25. Our calculations also showed that OHI is not among the 30 most popular stocks among hedge funds (click for Q2 rank).
In the financial world, there are a number of tools available to investors for valuing stocks. A pair of the lesser-known tools are the hedge fund and insider trading indicators. We have shown that historically those who follow the best picks of the best fund managers can outperform larger indices by a solid amount. Insider Monkey’s monthly stock picks have returned 185.4% since March 2017 and have outperformed S&P 500 ETFs by more than 79 percentage points (see details here). This is why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Noam Gottesman of GLG Partners
At Insider Monkey, we scour multiple sources to uncover the next big investing idea. For example, the plant-based food market is expected to explode by 100 by 2050, so we check that stock under the radar. We go through lists like the 10 best growth stocks to buy to choose the next Tesla that will offer a 10x return. Even though we only recommend positions in a tiny fraction of the companies we analyze, we check as many stocks as possible. We read letters from hedge fund investors and listen to equity pitches at hedge fund conferences. You can sign up for our free daily newsletter on our homepage. With all of that in mind, let’s take a look at the key hedge fund action regarding Omega Healthcare Investors Inc (NYSE: OHI).
Do hedge funds think the IHO is a good stock to buy now?
At the end of June, 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a variation of -20% compared to the previous quarter. By comparison, 23 hedge funds held bullish stocks or call options in the IHO a year ago. With the change in capital of hedge funds, there are a few notable hedge fund managers who were significantly increasing their stakes (or already accumulating large positions).
Specifically, DE Shaw was the largest shareholder in Omega Healthcare Investors Inc (NYSE: OHI), with an equity stake worth $ 83.1 million reported at the end of June. Lagging behind DE Shaw was AQR Capital Management, which raised a stake valued at $ 14 million. Two Sigma advisers, Marshall Wace LLP and Citadel Investment Group were also very attached to the stock, becoming one of the firm’s largest hedge fund holders. In terms of the portfolio weights assigned to each position, LDR Capital assigned the largest weight to Omega Healthcare Investors Inc (NYSE: OHI), approximately 0.32% of its 13F portfolio. AlphaCrest Capital Management is also relatively very bullish on the stock, designating 0.13% of its 13F equity portfolio to OHI.
Since Omega Healthcare Investors Inc (NYSE: OHI) witnessed bearish sentiment from the global hedge fund industry, it’s easy to see that a few hedgies have chosen to cut their entire holdings. in the second trimester. It should be mentioned that Israel Englander’s Millennium Management sold the largest position of all hedges monitored by Insider Monkey, valued at nearly $ 21.5 million in shares. Renaissance Technologies, also bid farewell to its stock, valued at around $ 17 million. These moves are interesting, as total hedge fund interest fell by 5 funds in the second quarter.
Let’s also look at hedge fund activity in other stocks similar to Omega Healthcare Investors Inc (NYSE: OHI). These shares are US Foods Holding Corp. (NYSE: USFD), Genpact Limited (NYSE: G), TFI International Inc. (NYSE: TFII), Under Armor Inc (NYSE: UA), Huntington Ingalls Industries Inc (NYSE: HII), Jefferies Financial Group Inc. (NYSE : JEF) and Advanced Drainage Systems Inc. (NYSE: WMS). All market capitalizations of these stocks are similar to the market capitalization of OHI.
[table] Ticker, number of HF with positions, total value of HF positions (x1000), change of HF position USFD, 35.1399474, -5 G, 22.234361, -1 TFII, 13.101129, -6 AU, 51.1786550 , 0 HII, 21.153435.1 JEF, 29.698210, -9 WMS, 26.1337049, -3 Medium, 28.1.815744, -3.3 [/table]
Check the table here if you have formatting issues.
As you can see, these stocks had an average of 28.1 hedge funds with bullish positions and the average amount invested in these stocks was $ 816 million. This figure was $ 143 million in the case of OHI. Under Armor Inc (NYSE: UA) is the most popular action in this table. On the other hand, TFI International Inc. (NYSE: TFII) is the least popular with only 13 bullish hedge fund positions. Omega Healthcare Investors Inc (NYSE: OHI) isn’t the least popular stock in this group, but hedge fund interest is still below average. Our overall hedge fund sentiment score for OHI is 33.2. Stocks with a 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 negative signal and we prefer to spend our time researching the stocks that hedge funds are accumulating on. Our calculations showed that the 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 24% in 2021 through October 22 and again topped the market by 1.6 percentage points. Unfortunately, OHI was not as popular as these 5 stocks (hedge fund sentiment was rather bearish); IHO investors were disappointed as the stock returned -14.3% since the end of June (through 10/22) and underperformed the market. If you want to invest in large cap stocks with huge upside potential, you should check out the 5 most popular stocks among hedge funds, as most of these stocks have already outperformed the market in 2021.
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Disclosure: none. This article originally appeared on Insider Monkey.