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Halliburton Company (HAL): Are Hedge Funds Right About This Stock?

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Based on the fact that hedge funds have collectively under-performed the market for several years, it would be easy to assume that their stock picks simply aren’t very good. However, our research shows this not to be the case. In fact, when it comes to their very top picks collectively, they show a strong ability to pick winning stocks. Between November 1, 2014 and October 30 of this year, less than 49% of the stocks in the S&P 500 beat the market. However, hedge funds’ top 30 stock picks from the index had a much higher success rate than this, at 63%. The returns from these 30 stocks also easily bested the broader market, at 9.5% compared to 5.2%, despite there being a few duds in there like Micron and Anadarko (even their collective wisdom isn’t perfect). The results show that there is plenty of merit to imitating the collective wisdom of top investors.

Is Halliburton Company (NYSE:HAL) the right investment to pursue these days? Hedge funds are becoming less confident. The number of long hedge fund bets decreased by 10 recently. HAL was in 59 hedge funds’ portfolios at the end of the third quarter of 2015. There were 69 hedge funds in our database with HAL positions at the end of the previous quarter. At the end of this article we will also compare HAL to other stocks, including Illinois Tool Works Inc. (NYSE:ITW), Liberty Global PLC LiLAC Class C (NASDAQ:LILAK), and Valero Energy Corporation (NYSE:VLO) to get a better sense of its popularity.

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To the average investor there are plenty of tools investors employ to assess their stock investments. Some of the most underrated tools are hedge fund and insider trading interest. We have shown that, historically, those who follow the top picks of the elite money managers can outperform the market by a superb margin (see the details here).

Now, we’re going to take a peek at the new action encompassing Halliburton Company (NYSE:HAL).

What does the smart money think about Halliburton Company (NYSE:HAL)?

At the end of the third quarter, a total of 59 of the hedge funds tracked by Insider Monkey were bullish on this stock, a decrease of 14% from the previous quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Jeffrey Ubben’s ValueAct Capital has the most valuable position in Halliburton Company (NYSE:HAL), worth close to $1.31 billion, corresponding to 7.6% of its total 13F portfolio. On ValueAct Capital’s heels is OZ Management, managed by Daniel S. Och, which holds a $498.3 million call position; 1.7% of its 13F portfolio is allocated to HAL. Remaining peers that hold long positions comprise Glenn Greenberg’s Brave Warrior Capital, D. E. Shaw’s D E Shaw and Ken Griffin’s Citadel Investment Group.

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