Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors’ favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the 12-month period ending October 30. However, 63% of hedge funds’ top 30 stock picks from the index did beat the market, and returned nearly twice as much on average as the index. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.
Is Omnicom Group Inc. (NYSE:OMC) a buy right now? The best stock pickers are turning less bullish. The number of long hedge fund bets fell by 4 in recent months. At the end of this article we will also compare OMC to other stocks including SK Telecom Co., Ltd. (ADR) (NYSE:SKM), Alliance Data Systems Corporation (NYSE:ADS), and Northern Trust Corporation (NASDAQ:NTRS) to get a better sense of its popularity.
Follow Omnicom Group Inc. (NYSE:OMC)
Follow Omnicom Group Inc. (NYSE:OMC)
Keeping this in mind, let’s take a look at the key action surrounding Omnicom Group Inc. (NYSE:OMC).
Hedge fund activity in Omnicom Group Inc. (NYSE:OMC)
Heading into Q4, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the second quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Pzena Investment Management, managed by Richard S. Pzena, holds the most valuable position in Omnicom Group Inc. (NYSE:OMC). Pzena Investment Management has a $391 million position in the stock, comprising 2.5% of its 13F portfolio. Sitting at the No. 2 spot is Winton Capital Management, led by David Harding, holding a $73.6 million position; 0.6% of its 13F portfolio is allocated to the company. Some other members of the smart money that are bullish encompass Paul Singer’s Elliott Management, Cliff Asness’ AQR Capital Management and Wallace Weitz’s Wallace R. Weitz & Co..
Due to the fact that Omnicom Group Inc. (NYSE:OMC) has witnessed falling interest from hedge fund managers, it’s safe to say that there were a few hedge funds that elected to cut their full holdings by the end of the third quarter. Intriguingly, George Hall’s Clinton Group sold off the largest stake of the “upper crust” of funds monitored by Insider Monkey, worth close to $5.8 million in stock, and Jacob Gottlieb’s Visium Asset Management was right behind this move, as the fund dropped about $2.6 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 4 funds by the end of the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Omnicom Group Inc. (NYSE:OMC) but similarly valued. These stocks are SK Telecom Co., Ltd. (ADR) (NYSE:SKM), Alliance Data Systems Corporation (NYSE:ADS), Northern Trust Corporation (NASDAQ:NTRS), and Liberty Interactive Corp (NASDAQ:QVCA). 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 |
|---|---|---|---|
| SKM | 7 | 85505 | 0 |
| ADS | 27 | 340409 | 5 |
| NTRS | 22 | 422536 | -8 |
| QVCA | 67 | 4220735 | -4 |
As you can see these stocks had an average of 30.75 hedge funds with bullish positions and the average amount invested in these stocks was $1267 million. That figure was $1530 million in OMC’s case. Liberty Interactive Corp (NASDAQ:QVCA) is the most popular stock in this table. On the other hand SK Telecom Co., Ltd. (ADR) (NYSE:SKM) is the least popular one with only 7 bullish hedge fund positions. Omnicom Group Inc. (NYSE:OMC) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard QVCA might be a better candidate to consider a long position.
