Here is What Hedge Funds Think About Omnicare, Inc. (OCR)

Omnicare, Inc. (NYSE:OCR) has experienced an increase in hedge fund sentiment of late.

To most investors, hedge funds are perceived as worthless, outdated investment tools of yesteryear. While there are greater than 8000 funds in operation today, we hone in on the upper echelon of this group, about 450 funds. It is estimated that this group oversees most of the hedge fund industry’s total asset base, and by keeping an eye on their best investments, we have spotted a number of investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Equally as key, bullish insider trading activity is a second way to parse down the financial markets. As the old adage goes: there are many motivations for an insider to downsize shares of his or her company, but only one, very simple reason why they would behave bullishly. Plenty of academic studies have demonstrated the market-beating potential of this method if you know where to look (learn more here).

Now, it’s important to take a peek at the latest action encompassing Omnicare, Inc. (NYSE:OCR).

How are hedge funds trading Omnicare, Inc. (NYSE:OCR)?

In preparation for this quarter, a total of 27 of the hedge funds we track were bullish in this stock, a change of 13% from the previous quarter. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their stakes significantly.

Of the funds we track, Iridian Asset Management, managed by David Cohen and Harold Levy, holds the largest position in Omnicare, Inc. (NYSE:OCR). Iridian Asset Management has a $276.1 million position in the stock, comprising 4.1% of its 13F portfolio. Coming in second is Robert Rodriguez and Steven Romick of First Pacific Advisors LLC, with a $266.2 million position; the fund has 2.9% of its 13F portfolio invested in the stock. Some other hedge funds that are bullish include Peter Adam Hochfelder’s Brahman Capital, Jean-Marie Eveillard’s First Eagle Investment Management and Wallace Weitz’s Wallace R. Weitz & Co..

As aggregate interest increased, specific money managers were leading the bulls’ herd. First Pacific Advisors LLC, managed by Robert Rodriguez and Steven Romick, created the biggest position in Omnicare, Inc. (NYSE:OCR). First Pacific Advisors LLC had 266.2 million invested in the company at the end of the quarter. Phill Gross and Robert Atchinson’s Adage Capital Management also made a $9.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Joel Greenblatt’s Gotham Asset Management, Jacob Gottlieb’s Visium Asset Management, and Dmitry Balyasny’s Balyasny Asset Management.

Insider trading activity in Omnicare, Inc. (NYSE:OCR)

Insider buying is best served when the company we’re looking at has seen transactions within the past half-year. Over the last 180-day time frame, Omnicare, Inc. (NYSE:OCR) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Omnicare, Inc. (NYSE:OCR). These stocks are McKesson Corporation (NYSE:MCK), Cardinal Health, Inc. (NYSE:CAH), “, and AmerisourceBergen Corp. (NYSE:ABC). This group of stocks belong to the drugs wholesale industry and their market caps match OCR’s market cap.

With the returns demonstrated by our studies, everyday investors must always watch hedge fund and insider trading sentiment, and Omnicare, Inc. (NYSE:OCR) is no exception.

Click here to learn why you should track hedge funds