Is OM Group, Inc. (NYSE:OMG) an excellent investment today? The smart money is getting more bullish. The number of long hedge fund positions rose by 8 recently.
If you’d ask most traders, hedge funds are perceived as underperforming, outdated investment tools of years past. While there are more than 8000 funds trading today, we at Insider Monkey look at the upper echelon of this group, around 450 funds. Most estimates calculate that this group has its hands on the majority of the hedge fund industry’s total capital, and by watching their best picks, we have unearthed a number of investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum 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 outperformed the S&P 500 index by 24 percentage points in 7 months (see the details here).
Just as important, optimistic insider trading sentiment is another way to break down the investments you’re interested in. As the old adage goes: there are many stimuli for a corporate insider to sell shares of his or her company, but just one, very clear reason why they would behave bullishly. Several empirical studies have demonstrated the useful potential of this method if shareholders understand what to do (learn more here).
With these “truths” under our belt, let’s take a peek at the latest action encompassing OM Group, Inc. (NYSE:OMG).
How are hedge funds trading OM Group, Inc. (NYSE:OMG)?
At year’s end, a total of 17 of the hedge funds we track held long positions in this stock, a change of 89% from the third quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings considerably.
Of the funds we track, Chuck Royce’s Royce & Associates had the most valuable position in OM Group, Inc. (NYSE:OMG), worth close to $18.5 million, accounting for 0.1% of its total 13F portfolio. Coming in second is Phill Gross and Robert Atchinson of Adage Capital Management, with a $10.5 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining hedgies with similar optimism include D. E. Shaw’s D E Shaw, Jeffrey Gendell’s Tontine Asset Management and Jim Simons’s Renaissance Technologies.
With a general bullishness amongst the heavyweights, specific money managers have jumped into OM Group, Inc. (NYSE:OMG) headfirst. Adage Capital Management, managed by Phill Gross and Robert Atchinson, initiated the most valuable position in OM Group, Inc. (NYSE:OMG). Adage Capital Management had 10.5 million invested in the company at the end of the quarter. Israel Englander’s Catapult Capital Management also initiated a $3.1 million position during the quarter. The other funds with brand new OMG positions are Joel Greenblatt’s Gotham Asset Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Neil Chriss’s Hutchin Hill Capital.
Insider trading activity in OM Group, Inc. (NYSE:OMG)
Insider buying is at its handiest when the primary stock in question has seen transactions within the past half-year. Over the latest 180-day time frame, OM Group, Inc. (NYSE:OMG) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let’s also take a look at hedge fund and insider activity in other stocks similar to OM Group, Inc. (NYSE:OMG). These stocks are Koppers Holdings Inc. (NYSE:KOP), WD-40 Company (NASDAQ:WDFC), Flotek Industries Inc (NYSE:FTK), Quaker Chemical Corp (NYSE:KWR), and Kraton Performance Polymers Inc (NYSE:KRA). All of these stocks are in the specialty chemicals industry and their market caps match OMG’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Koppers Holdings Inc. (NYSE:KOP)||10||0||7|
|WD-40 Company (NASDAQ:WDFC)||4||1||4|
|Flotek Industries Inc (NYSE:FTK)||10||0||1|
|Quaker Chemical Corp (NYSE:KWR)||7||0||6|
|Kraton Performance Polymers Inc (NYSE:KRA)||10||0||3|
With the returns exhibited by the aforementioned tactics, retail investors must always monitor hedge fund and insider trading activity, and OM Group, Inc. (NYSE:OMG) shareholders fit into this picture quite nicely.