Hedge Funds Are Getting Out Of Omnicom Group Inc. (OMC)

Is Omnicom Group Inc. (NYSE:OMC) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Is Omnicom Group Inc. (NYSE:OMC) a healthy stock for your portfolio? Money managers were becoming less confident. The number of bullish hedge fund positions were cut by 5 recently. Omnicom Group Inc. (NYSE:OMC) was in 25 hedge funds’ portfolios at the end of September. The all time high for this statistic is 34. Our calculations also showed that OMC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Keeping this in mind let’s take a gander at the fresh hedge fund action surrounding Omnicom Group Inc. (NYSE:OMC).

John Rogers of Ariel Investments

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

At the end of the third quarter, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -17% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards OMC over the last 25 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, D E Shaw, managed by D. E. Shaw, holds the most valuable position in Omnicom Group Inc. (NYSE:OMC). D E Shaw has a $65 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is Two Sigma Advisors, managed by John Overdeck and David Siegel, which holds a $57.7 million position; 0.1% of its 13F portfolio is allocated to the stock. Other peers that hold long positions contain John W. Rogers’s Ariel Investments, Israel Englander’s Millennium Management and Cliff Asness’s AQR Capital Management. In terms of the portfolio weights assigned to each position L2 Asset Management allocated the biggest weight to Omnicom Group Inc. (NYSE:OMC), around 1.49% of its 13F portfolio. Ariel Investments is also relatively very bullish on the stock, dishing out 0.41 percent of its 13F equity portfolio to OMC.

Due to the fact that Omnicom Group Inc. (NYSE:OMC) has faced bearish sentiment from the smart money, logic holds that there was a specific group of money managers that decided to sell off their entire stakes heading into Q4. Intriguingly, Jack Woodruff’s Candlestick Capital Management dumped the largest position of all the hedgies watched by Insider Monkey, totaling an estimated $45.7 million in stock, and Felix Wai’s Zeno Research was right behind this move, as the fund sold off about $9.3 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 5 funds heading into Q4.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Omnicom Group Inc. (NYSE:OMC) but similarly valued. These stocks are Confluent Inc. (NASDAQ:CFLT), argenx SE (NASDAQ:ARGX), Novavax, Inc. (NASDAQ:NVAX), Royalty Pharma Plc (NASDAQ:RPRX), Just Eat Takeaway.com N.V. (NASDAQ:GRUB), United Airlines Holdings Inc (NASDAQ:UAL), and Sociedad Química y Minera de Chile S.A. (NYSE:SQM). This group of stocks’ market values resemble OMC’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.3 hedge funds with bullish positions and the average amount invested in these stocks was $893 million. That figure was $396 million in OMC’s case. Novavax, Inc. (NASDAQ:NVAX) is the most popular stock in this table. On the other hand Just Eat Takeaway.com N.V. (NASDAQ:GRUB) is the least popular one with only 18 bullish hedge fund positions. Omnicom Group Inc. (NYSE:OMC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for OMC is 42.6. 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. 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 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 31.1% in 2021 through December 9th and surpassed the market again by 5.1 percentage points. Unfortunately OMC wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); OMC investors were disappointed as the stock returned -3.7% since the end of September (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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