Is Omnicell, Inc. (OMCL) A Good Stock To Buy?

Looking for high-potential stocks? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 7.6% in the 12 months ending November 21, with more than 51% of the stocks in the index failing to beat the benchmark. Therefore, the odds that one will pin down a winner by randomly picking a stock are less than the odds in a fair coin-tossing game. Conversely, best performing hedge funds’ 30 preferred mid-cap stocks generated a return of 18% during the same 12-month period. Coincidence? It might happen to be so, but it is unlikely. Our research covering a 17-year period indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like Omnicell, Inc. (NASDAQ:OMCL).

Is Omnicell, Inc. (NASDAQ:OMCL) the right pick for your portfolio? It looks like investors who are in the know are buying. The number of bullish hedge fund bets inched up by one last quarter. There were nine funds in our database with OMCL positions at the end of September. At the end of this article we will also compare OMCL to other stocks including Hope Bancorp Inc (NASDAQ:HOPE), Triumph Group Inc (NYSE:TGI), and Astec Industries, Inc. (NASDAQ:ASTE) to get a better sense of its popularity.

We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.

Now, let’s go over the key action encompassing Omnicell, Inc. (NASDAQ:OMCL).

Hedge fund activity in Omnicell, Inc. (NASDAQ:OMCL)

At the end of the third quarter, a total of nine of the hedge funds tracked by Insider Monkey were long this stock, up by 13% from the previous quarter. By comparison, 12 hedge funds held shares or bullish call options in OMCL heading into this year. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Fisher Asset Management, led by Ken Fisher, holds the number one position in Omnicell, Inc. (NASDAQ:OMCL). Fisher Asset Management has a $19.8 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Lyon Street Capital, led by Brian C. Freckmann, which holds a $5.1 million position; 2.5% of its 13F portfolio is allocated to the company. Remaining professional money managers that hold long positions include Adam Wright and Gary Kohler’s Blue Clay Capital and D. E. Shaw’s D E Shaw. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

As aggregate interest increased, some big names were leading the bulls’ herd. Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, initiated the most outsized position in Omnicell, Inc. (NASDAQ:OMCL). Arrowstreet Capital had $1.9 million invested in the company at the end of the quarter. Ira Unschuld’s Brant Point Investment Management also initiated a $0.8 million position during the quarter.

Let’s go over hedge fund activity in other stocks similar to Omnicell, Inc. (NASDAQ:OMCL). These stocks are Hope Bancorp Inc (NASDAQ:HOPE), Triumph Group Inc (NYSE:TGI), Astec Industries, Inc. (NASDAQ:ASTE), and Coca-Cola Bottling Co. Consolidated (NASDAQ:COKE). All of these stocks’ market caps match OMCL’s market cap.

As you can see these stocks had an average of 13 funds with bullish positions and the average amount invested in these stocks was $100 million. That figure was $32 million in OMCL’s case. Triumph Group Inc (NYSE:TGI) is the most popular stock in this table. On the other hand Coca-Cola Bottling Co. Consolidated (NASDAQ:COKE) is the least popular one with only three bullish hedge fund positions. Omnicell, Inc. (NASDAQ:OMCL) 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 TGI might be a better candidate to consider taking a long position in.

Disclosure: none