Do Hedge Funds and Insiders Love Omega Healthcare Investors Inc (OHI)?: LTC Properties Inc (LTC), National Health Investors Inc (NHI)

Omega Healthcare Investors Inc (NYSE:OHI) investors should pay attention to a decrease in enthusiasm from smart money recently.

Omega Healthcare Investors Inc (NYSE:OHI)To most market participants, hedge funds are viewed as underperforming, old financial tools of years past. While there are more than 8000 funds trading today, we at Insider Monkey look at the moguls of this group, close to 450 funds. It is estimated that this group controls the majority of the hedge fund industry’s total asset base, and by paying attention to their highest performing investments, we have formulated a few investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 25 percentage points in 6.5 month (explore the details and some picks here).

Just as important, optimistic insider trading sentiment is another way to parse down the financial markets. There are a variety of reasons for a corporate insider to get rid of shares of his or her company, but just one, very obvious reason why they would behave bullishly. Plenty of academic studies have demonstrated the impressive potential of this tactic if piggybackers know what to do (learn more here).

With these “truths” under our belt, let’s take a peek at the recent action encompassing Omega Healthcare Investors Inc (NYSE:OHI).

How are hedge funds trading Omega Healthcare Investors Inc (NYSE:OHI)?

In preparation for this year, a total of 12 of the hedge funds we track held long positions in this stock, a change of -25% from the previous quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings meaningfully.

According to our comprehensive database, Jeffrey Furber’s AEW Capital Management had the largest position in Omega Healthcare Investors Inc (NYSE:OHI), worth close to $48 million, accounting for 1.3% of its total 13F portfolio. The second largest stake is held by David Dreman of Dreman Value Management, with a $35 million position; the fund has 1% of its 13F portfolio invested in the stock. Remaining hedge funds with similar optimism include Jim Simons’s Renaissance Technologies, J. Alan Reid, Jr.’s Forward Management and Richard Driehaus’s Driehaus Capital.

Seeing as Omega Healthcare Investors Inc (NYSE:OHI) has faced falling interest from the aggregate hedge fund industry, it’s easy to see that there were a few money managers who sold off their entire stakes in Q4. At the top of the heap, D. E. Shaw’s D E Shaw sold off the biggest stake of all the hedgies we track, valued at an estimated $8 million in stock.. Steven Cohen’s fund, SAC Capital Advisors, also cut its stock, about $1 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 4 funds in Q4.

How are insiders trading Omega Healthcare Investors Inc (NYSE:OHI)?

Bullish insider trading is most useful when the primary stock in question has experienced transactions within the past 180 days. Over the latest half-year time period, Omega Healthcare Investors Inc (NYSE:OHI) has seen 1 unique insiders purchasing, and 6 insider sales (see the details of insider trades here).

Let’s check out 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). This group of stocks belong to the reit – healthcare facilities industry and their market caps match OHI’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
LTC Properties Inc (NYSE:LTC) 5 0 5
National Health Investors Inc (NYSE:NHI) 6 0 2
Medical Properties Trust, Inc. (NYSE:MPW) 9 0 5
Healthcare Realty Trust Inc (NYSE:HR) 5 1 0
Healthcare Trust Of America Inc (NYSE:HTA) 4 7 0

With the results demonstrated by our strategies, retail investors must always watch hedge fund and insider trading activity, and Omega Healthcare Investors Inc (NYSE:OHI) is no exception.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.