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Omega Healthcare Investors: Healthier Now

David Pinsen profile picture
David Pinsen
18.67K Followers

Summary

  • Last October, I wrote that OHI failed both of Portfolio Armor's two screens to avoid bad investments. OHI posted a total return of -11.3% over the next 6 months.
  • Now, OHI passes both of those two screens, and it passes an additional test, suggesting that it's likely to post a positive return over the next 6 months.
  • I elaborate, and put these results into a broader context.

Site of new OHI Senior Housing

The site of OHI operator Maplewood Senior Living's new Manhattan retirement home (via City Realty).

OHI: Healthier Now

I've written in the past (e.g., here) about how Omega Healthcare Investors (NYSE:OHI) had failed one or the other of Portfolio Armor's two screens to avoid bad investments. After seeing how OHI has performed since late April, I thought it might pass the first of those screens, which looks at total returns.

Chart via YCharts.I was right: OHI passes that first screen. It also passes Portfolio Armor's second preliminary screen, plus an additional test. I elaborate below, but first, here are two reasons why you should care about these screens.

Why You Should Care

The first reason you should care about the two preliminary screens is that they can help you avoid stocks that are heading for drawdown over the next 6 months. On October 9th of last year, I noted that OHI had failed both preliminary screens and, consequently, was not healthy enough for my system. Here's how OHI performed over the next 6 months, taking into account its dividends.

Chart via YCharts

The second reason you should care is that the names that pass these screens with the highest scores tend to outperform the market over the next 6 months, on average. I've been sharing the top 10 names from this system with my Bulletproof Investing subscribers each week since June 8th of last year, so we have 6-month performance numbers for 25 of those weekly cohorts. As you can see in the table below, 21 out of 25 outperformed the market over the next 6 months.

Starting Date Portfolio Armor 6-Month Performance SPY 6-Month Performance
June 8, 2017 14.49% 9.99%
June 15, 2017 19.85% 10.97%
June 22, 2017 24.46% 11.27%
June 29, 2017 18.24% 11.68%
July 6, 2017 21.03%

To see this week's top 10 names, you can sign up for a free two-week trial here.

This article was written by

David Pinsen profile picture
18.67K Followers
I developed the hedged portfolio method of investing at Portfolio Armor, and I run a Marketplace service at Seeking Alpha based on it called Bulletproof Investing.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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