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Is OM Asset Management PLC (OMAM) A Good Stock To Buy?

It’s a little-known fact that stock performance is not evenly distributed (i.e. you don’t have a 50/50 chance of picking a market-beating stock). In fact, despite the S&P 500 gaining about 5.2% between November 1, 2014 and October 30, 2015, less than 49% of the stocks in the index beat the market during that time. In contrast, the 30 stocks from the index which were the most popular among the investors that we track returned 9.5% during that time and 63% of them beat the market. This shows that while hedge funds get a lot of flak from the mainstream media for their performance, it can be rewarding to follow their moves using the right sets of data. Even then, there is never a fool proof strategy to generating returns, as even the collective wisdom of top hedge funds gets it wrong some times, as in the case of some of their top picks from the index like Micron and Anadarko. The data though, shows that following the collective wisdom of select hedge funds can be a very wise move overall.

Is OM Asset Management PLC (NYSE:OMAM) worth your attention right now? The best stock pickers are taking a bearish view. The number of bullish hedge fund positions went down by 1 in recent months. OMAM was in 13 hedge funds’ portfolios at the end of September. There were 14 hedge funds in our database with OMAM holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as South State Corporation (NASDAQ:SSB), Science Applications International Corp (NYSE:SAIC), and Entegris Inc (NASDAQ:ENTG) to gather more data points.

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Keeping this in mind, let’s check out the fresh action surrounding OM Asset Management PLC (NYSE:OMAM).

What have hedge funds been doing with OM Asset Management PLC (NYSE:OMAM)?

At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -7% from the second quarter. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Ken Griffin’s Citadel Investment Group has the biggest position in OM Asset Management PLC (NYSE:OMAM), worth close to $33.1 million, accounting for less than 0.1% of its total 13F portfolio. The second largest stake is held by Sirios Capital Management, managed by John Brennan, which holds a $19.6 million position; the fund has 0.6% of its 13F portfolio invested in the stock. Some other professional money managers that hold long positions consist of Joe Huber’s Huber Capital Management, Sharif Siddiqui’s Alpenglow Capital and Steve Cohen’s Point72 Asset Management.

Due to the fact that OM Asset Management PLC (NYSE:OMAM) has experienced declining sentiment from the entirety of the hedge funds we track, logic holds that there is a sect of fund managers that elected to cut their positions entirely last quarter. Interestingly, David Rodriguez-Fraile’s BlueMar Capital Management dumped the biggest investment of the 700 funds monitored by Insider Monkey, worth about $2.4 million in stock. Benjamin A. Smith’s fund, Laurion Capital Management, also sold off its stock, about $1.6 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 1 funds last quarter.

Let’s also examine hedge fund activity in other stocks similar to OM Asset Management PLC (NYSE:OMAM). We will take a look at South State Corporation (NASDAQ:SSB), Science Applications International Corp (NYSE:SAIC), Entegris Inc (NASDAQ:ENTG), and Black Hills Corp (NYSE:BKH). This group of stocks’ market values match OMAM’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SSB 12 78091 3
SAIC 20 125846 2
ENTG 19 396921 5
BKH 18 129397 3

As you can see these stocks had an average of 17.25 hedge funds with bullish positions and the average amount invested in these stocks was $183 million. That figure was $99 million in OMAM’s case. Science Applications International Corp (NYSE:SAIC) is the most popular stock in this table. On the other hand South State Corporation (NASDAQ:SSB) is the least popular one with only 12 bullish hedge fund positions. OM Asset Management PLC (NYSE:OMAM) 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 SAIC might be a better candidate to consider a long position.

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