Omnicom Group Inc. (OMC): Hedge Funds Are Bullish and Insiders Are Bearish, What Should You Do?

Omnicom Group Inc. (NYSE:OMC) was in 24 hedge funds’ portfolio at the end of the first quarter of 2013. OMC investors should be aware of an increase in hedge fund sentiment in recent months. There were 22 hedge funds in our database with OMC positions at the end of the previous quarter.

To the average investor, there are plenty of gauges investors can use to analyze their holdings. A couple of the best are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the best fund managers can beat the S&P 500 by a very impressive amount (see just how much).

Equally as integral, positive insider trading activity is another way to break down the investments you’re interested in. There are lots of stimuli for an upper level exec to cut shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Many empirical studies have demonstrated the useful potential of this strategy if shareholders know what to do (learn more here).

With all of this in mind, we’re going to take a glance at the recent action surrounding Omnicom Group Inc. (NYSE:OMC).

How have hedgies been trading Omnicom Group Inc. (NYSE:OMC)?

At the end of the first quarter, a total of 24 of the hedge funds we track held long positions in this stock, a change of 9% from the previous quarter. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were upping their holdings considerably.

When looking at the hedgies we track, First Eagle Investment Management, managed by Jean-Marie Eveillard, holds the most valuable position in Omnicom Group Inc. (NYSE:OMC). First Eagle Investment Management has a $508.1 million position in the stock, comprising 1.7% of its 13F portfolio. On First Eagle Investment Management’s heels is Richard S. Pzena of Pzena Investment Management, with a $445.5 million position; 3.1% of its 13F portfolio is allocated to the stock. Other hedgies that hold long positions include James H. Litinsky’s JHL Capital Group, John W. Rogers’s Ariel Investments and Wallace Weitz’s Wallace R. Weitz & Co..

With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Stevens Capital Management, managed by Matthew Tewksbury, initiated the most valuable position in Omnicom Group Inc. (NYSE:OMC). Stevens Capital Management had 8.2 million invested in the company at the end of the quarter. Philippe Jabre’s Jabre Capital Partners also initiated a $4.7 million position during the quarter. The other funds with brand new OMC positions are John Overdeck and David Siegel’s Two Sigma Advisors, Glenn Russell Dubin’s Highbridge Capital Management, and Mike Vranos’s Ellington.

How are insiders trading Omnicom Group Inc. (NYSE:OMC)?

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

Let’s also review hedge fund and insider activity in other stocks similar to Omnicom Group Inc. (NYSE:OMC). These stocks are Monster Worldwide, Inc. (NYSE:MWW), Focus Media Holding Limited (ADR) (NASDAQ:FMCN), Lamar Advertising Co (NASDAQ:LAMR), Interpublic Group of Companies Inc (NYSE:IPG), and WPP PLC (ADR) (NASDAQ:WPPGY). All of these stocks are in the advertising agencies industry and their market caps are similar to OMC’s market cap.

With the returns demonstrated by our studies, everyday investors must always monitor hedge fund and insider trading activity, and Omnicom Group Inc. (NYSE:OMC) is no exception.

Click here to learn why you should track hedge funds