Is OM Group, Inc. (OMG) Going to Burn These Hedge Funds?

OM Group, Inc. (NYSE:OMG) shareholders have witnessed a decrease in enthusiasm from smart money recently.

To the average investor, there are dozens of gauges market participants can use to monitor stocks. A couple of the most innovative are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the best hedge fund managers can outperform the broader indices by a healthy amount (see just how much).

Equally as important, positive insider trading activity is another way to parse down the investments you’re interested in. As the old adage goes: there are a number of incentives for an upper level exec to drop shares of his or her company, but only one, very clear reason why they would behave bullishly. Several academic studies have demonstrated the valuable potential of this strategy if piggybackers know what to do (learn more here).

With these “truths” under our belt, let’s take a peek at the latest action regarding OM Group, Inc. (NYSE:OMG).

How are hedge funds trading OM Group, Inc. (NYSE:OMG)?

In preparation for this quarter, a total of 19 of the hedge funds we track were long in this stock, a change of -10% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their holdings significantly.

Of the funds we track, Chuck Royce’s Royce & Associates had the biggest position in OM Group, Inc. (NYSE:OMG), worth close to $20.4 million, accounting for 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is Passport Capital, managed by John Burbank, which held a $7.4 million position; 0.3% of its 13F portfolio is allocated to the stock. Other hedge funds that are bullish include Gilchrist Berg’s Water Street Capital, D. E. Shaw’s D E Shaw and Jim Simons’s Renaissance Technologies.

Judging by the fact that OM Group, Inc. (NYSE:OMG) has faced declining sentiment from the entirety of the hedge funds we track, we can see that there was a specific group of fund managers that elected to cut their full holdings last quarter. It’s worth mentioning that Youlia Miteva’s Proxima Capital Management said goodbye to the biggest position of the “upper crust” of funds we track, worth close to $16.9 million in stock.. Phill Gross and Robert Atchinson’s fund, Adage Capital Management, also dumped its stock, about $10.5 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 2 funds last quarter.

Insider trading activity in OM Group, Inc. (NYSE:OMG)

Insider buying is best served when the company we’re looking at has seen transactions within the past six months. Over the latest 180-day time period, OM Group, Inc. (NYSE:OMG) has experienced zero unique insiders purchasing, and 1 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to OM Group, Inc. (NYSE:OMG). These stocks are Koppers Holdings Inc. (NYSE:KOP), WD-40 Company (NASDAQ:WDFC), Flotek Industries Inc (NYSE:FTK), Quaker Chemical Corp (NYSE:KWR), and Kraton Performance Polymers Inc (NYSE:KRA). This group of stocks belong to the specialty chemicals industry and their market caps are similar to OMG’s market cap.

With the results shown by the aforementioned studies, retail investors must always watch hedge fund and insider trading activity, and OM Group, Inc. (NYSE:OMG) applies perfectly to this mantra.

Click here to learn why you should track hedge funds