Omega Healthcare Investors Inc (OHI): Insiders Aren’t Crazy About It

Omega Healthcare Investors Inc (NYSE:OHI) has seen a decrease in hedge fund interest lately.

In the eyes of most investors, hedge funds are viewed as slow, old financial vehicles of years past. While there are greater than 8000 funds in operation today, we at Insider Monkey hone in on the masters of this club, around 450 funds. It is widely believed that this group controls the lion’s share of all hedge funds’ total capital, and by watching their top equity investments, we have determined a number of investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Just as integral, optimistic insider trading activity is a second way to parse down the world of equities. Obviously, there are many reasons for an insider to get rid of shares of his or her company, but just one, very clear reason why they would initiate a purchase. Plenty of academic studies have demonstrated the impressive potential of this method if shareholders understand what to do (learn more here).

With all of this in mind, it’s important to take a look at the latest action surrounding Omega Healthcare Investors Inc (NYSE:OHI).

Hedge fund activity in Omega Healthcare Investors Inc (NYSE:OHI)

At the end of the first quarter, a total of 13 of the hedge funds we track were long in this stock, a change of 0% from the previous quarter. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their stakes considerably.

Of the funds we track, Dreman Value Management, managed by David Dreman, holds the largest position in Omega Healthcare Investors Inc (NYSE:OHI). Dreman Value Management has a $44.2 million position in the stock, comprising 1.2% of its 13F portfolio. Coming in second is Renaissance Technologies, managed by Jim Simons, which held a $36.3 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedge funds that are bullish include Jeffrey Furber’s AEW Capital Management, Richard Driehaus’s Driehaus Capital and Israel Englander’s Millennium Management.

Judging by the fact that Omega Healthcare Investors Inc (NYSE:OHI) has experienced bearish sentiment from the smart money, logic holds that there lies a certain “tier” of hedge funds that decided to sell off their positions entirely last quarter. Interestingly, J. Alan Reid, Jr.’s Forward Management dumped the largest position of the 450+ funds we watch, totaling about $17.1 million in stock.. John Overdeck and David Siegel’s fund, Two Sigma Advisors, also said goodbye to its stock, about $1.2 million worth. These bearish behaviors are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

What do corporate executives and insiders think about Omega Healthcare Investors Inc (NYSE:OHI)?

Insider trading activity, especially when it’s bullish, is particularly usable when the primary stock in question has experienced transactions within the past 180 days. Over the latest six-month time period, Omega Healthcare Investors Inc (NYSE:OHI) has seen zero unique insiders buying, and 5 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Omega Healthcare Investors Inc (NYSE:OHI). These stocks are LTC Properties Inc (NYSE:LTC), National Health Investors Inc (NYSE:NHI), Medical Properties Trust, Inc. (NYSE:MPW), Healthcare Realty Trust Inc (NYSE:HR), and Healthcare Trust Of America Inc (NYSE:HTA). All of these stocks are in the reit – healthcare facilities industry and their market caps resemble OHI’s market cap.

With the returns demonstrated by the aforementioned time-tested strategies, retail investors must always monitor hedge fund and insider trading activity, and Omega Healthcare Investors Inc (NYSE:OHI) applies perfectly to this mantra.

Click here to learn why you should track hedge funds