In this article we are going to use hedge fund sentiment as a tool and determine whether Owens & Minor, Inc. (NYSE:OMI) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Owens & Minor, Inc. (NYSE:OMI) was in 20 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 20. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. OMI has seen an increase in activity from the world’s largest hedge funds of late. There were 16 hedge funds in our database with OMI positions at the end of the first quarter. Our calculations also showed that OMI isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Louis Navellier of Navellier & Associates
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. 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. Keeping this in mind we’re going to check out the fresh hedge fund action regarding Owens & Minor, Inc. (NYSE:OMI).
Do Hedge Funds Think OMI Is A Good Stock To Buy Now?
At second quarter’s end, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 25% from the previous quarter. By comparison, 15 hedge funds held shares or bullish call options in OMI 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.
The largest stake in Owens & Minor, Inc. (NYSE:OMI) was held by Renaissance Technologies, which reported holding $97.7 million worth of stock at the end of June. It was followed by D E Shaw with a $88.7 million position. Other investors bullish on the company included Deerfield Management, Royce & Associates, and Driehaus Capital. In terms of the portfolio weights assigned to each position Endurant Capital Management allocated the biggest weight to Owens & Minor, Inc. (NYSE:OMI), around 0.78% of its 13F portfolio. Deerfield Management is also relatively very bullish on the stock, dishing out 0.75 percent of its 13F equity portfolio to OMI.
As one would reasonably expect, key hedge funds have jumped into Owens & Minor, Inc. (NYSE:OMI) headfirst. Driehaus Capital, managed by Richard Driehaus, initiated the largest position in Owens & Minor, Inc. (NYSE:OMI). Driehaus Capital had $8.1 million invested in the company at the end of the quarter. Noam Gottesman’s GLG Partners also initiated a $3.7 million position during the quarter. The other funds with new positions in the stock are Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management, Louis Navellier’s Navellier & Associates, and Qing Li’s Sciencast Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Owens & Minor, Inc. (NYSE:OMI) but similarly valued. These stocks are Simmons First National Corporation (NASDAQ:SFNC), SITE Centers Corp. (NYSE:SITC), Essential Properties Realty Trust, Inc. (NYSE:EPRT), Tower Semiconductor Ltd. (NASDAQ:TSEM), Graham Holdings Co (NYSE:GHC), Momo Inc (NASDAQ:MOMO), and Evertec Inc (NYSE:EVTC). This group of stocks’ market values are similar to OMI’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SFNC | 7 | 12783 | -5 |
| SITC | 18 | 91830 | 9 |
| EPRT | 7 | 50579 | 2 |
| TSEM | 15 | 382955 | -4 |
| GHC | 23 | 467628 | 0 |
| MOMO | 24 | 305589 | -1 |
| EVTC | 20 | 229559 | -1 |
| Average | 16.3 | 220132 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.3 hedge funds with bullish positions and the average amount invested in these stocks was $220 million. That figure was $295 million in OMI’s case. Momo Inc (NASDAQ:MOMO) is the most popular stock in this table. On the other hand Simmons First National Corporation (NASDAQ:SFNC) is the least popular one with only 7 bullish hedge fund positions. Owens & Minor, Inc. (NYSE:OMI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for OMI is 77.2. 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 positive signal but 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 24% in 2021 through October 22nd and beat the market again by 1.6 percentage points. Unfortunately OMI wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on OMI were disappointed as the stock returned -14.8% since the end of June (through 10/22) 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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
