Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Omnicom Group Inc. (NYSE:OMC) based on that data.
Is OMC a good stock to buy? Omnicom Group Inc. (NYSE:OMC) shareholders have witnessed an increase in activity from the world’s largest hedge funds of late. Omnicom Group Inc. (NYSE:OMC) was in 34 hedge funds’ portfolios at the end of September. The all time high for this statistic is 31. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that OMC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
John Rogers of Ariel Investments
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. 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 website. Now we’re going to review the latest hedge fund action surrounding Omnicom Group Inc. (NYSE:OMC).
Do Hedge Funds Think OMC Is A Good Stock To Buy Now?
At the end of September, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 10% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards OMC over the last 21 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the biggest position in Omnicom Group Inc. (NYSE:OMC). Citadel Investment Group has a $230.1 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by AQR Capital Management, led by Cliff Asness, holding a $98.3 million position; 0.2% of its 13F portfolio is allocated to the company. Remaining peers that hold long positions comprise Steve Cohen’s Point72 Asset Management, Israel Englander’s Millennium Management and John W. Rogers’s Ariel Investments. In terms of the portfolio weights assigned to each position TwinBeech Capital allocated the biggest weight to Omnicom Group Inc. (NYSE:OMC), around 0.7% of its 13F portfolio. L2 Asset Management is also relatively very bullish on the stock, designating 0.49 percent of its 13F equity portfolio to OMC.
With a general bullishness amongst the heavyweights, key money managers have jumped into Omnicom Group Inc. (NYSE:OMC) headfirst. Point72 Asset Management, managed by Steve Cohen, established the most valuable position in Omnicom Group Inc. (NYSE:OMC). Point72 Asset Management had $39.4 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $8.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management, Jinghua Yan’s TwinBeech Capital, and Paul Tudor Jones’s Tudor Investment Corp.
Let’s check out hedge fund activity in other stocks similar to Omnicom Group Inc. (NYSE:OMC). We will take a look at Ubiquiti Inc. (NYSE:UI), Advance Auto Parts, Inc. (NYSE:AAP), Halliburton Company (NYSE:HAL), Eastman Chemical Company (NYSE:EMN), Vipshop Holdings Limited (NYSE:VIPS), James Hardie Industries plc (NYSE:JHX), and CNH Industrial NV (NYSE:CNHI). This group of stocks’ market caps resemble OMC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UI | 20 | 205383 | -9 |
| AAP | 42 | 1618939 | -5 |
| HAL | 32 | 676988 | 2 |
| EMN | 27 | 183978 | 0 |
| VIPS | 24 | 268749 | -4 |
| JHX | 4 | 11513 | -1 |
| CNHI | 18 | 289206 | 1 |
| Average | 23.9 | 464965 | -2.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.9 hedge funds with bullish positions and the average amount invested in these stocks was $465 million. That figure was $528 million in OMC’s case. Advance Auto Parts, Inc. (NYSE:AAP) is the most popular stock in this table. On the other hand James Hardie Industries plc (NYSE:JHX) is the least popular one with only 4 bullish hedge fund positions. Omnicom Group Inc. (NYSE:OMC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for OMC is 77.5. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. Hedge funds were also right about betting on OMC as the stock returned 25.8% since the end of Q3 (through 12/18) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
