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Hedge Funds Are Getting Bullish On Halozyme Therapeutics, Inc. (HALO)

We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Halozyme Therapeutics, Inc. (NASDAQ:HALO) and determine whether hedge funds skillfully traded this stock.

Halozyme Therapeutics, Inc. (NASDAQ:HALO) has seen an increase in hedge fund sentiment of late. Halozyme Therapeutics, Inc. (NASDAQ:HALO) was in 26 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 26. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 23 hedge funds in our database with HALO holdings at the end of March. Our calculations also showed that HALO isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

To the average investor there are plenty of formulas stock traders have at their disposal to evaluate publicly traded companies. Two of the less utilized formulas are hedge fund and insider trading signals. We have shown that, historically, those who follow the best picks of the best fund managers can outperform the broader indices by a healthy amount (see the details here).

Bruce Kovner, Caxton Associates LP

Bruce Kovner of Caxton Associates LP

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. Keeping this in mind we’re going to take a peek at the recent hedge fund action surrounding Halozyme Therapeutics, Inc. (NASDAQ:HALO).

What does smart money think about Halozyme Therapeutics, Inc. (NASDAQ:HALO)?

At the end of the second quarter, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of 13% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards HALO over the last 20 quarters. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).

More specifically, D E Shaw was the largest shareholder of Halozyme Therapeutics, Inc. (NASDAQ:HALO), with a stake worth $56.3 million reported as of the end of September. Trailing D E Shaw was Two Sigma Advisors, which amassed a stake valued at $39.3 million. Fisher Asset Management, Renaissance Technologies, and Adage Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Portolan Capital Management allocated the biggest weight to Halozyme Therapeutics, Inc. (NASDAQ:HALO), around 1.63% of its 13F portfolio. Integral Health Asset Management is also relatively very bullish on the stock, dishing out 1.08 percent of its 13F equity portfolio to HALO.

As aggregate interest increased, key money managers were leading the bulls’ herd. Caxton Associates LP, managed by Bruce Kovner, assembled the most outsized position in Halozyme Therapeutics, Inc. (NASDAQ:HALO). Caxton Associates LP had $1.3 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also made a $1.3 million investment in the stock during the quarter. The other funds with brand new HALO positions are Minhua Zhang’s Weld Capital Management, Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management, and Greg Eisner’s Engineers Gate Manager.

Let’s also examine hedge fund activity in other stocks similar to Halozyme Therapeutics, Inc. (NASDAQ:HALO). We will take a look at PS Business Parks Inc (NYSE:PSB), Emcor Group Inc (NYSE:EME), FibroGen Inc (NASDAQ:FGEN), Cirrus Logic, Inc. (NASDAQ:CRUS), Silgan Holdings Inc. (NASDAQ:SLGN), Spirit Realty Capital Inc (NYSE:SRC), and United Bankshares, Inc. (NASDAQ:UBSI). All of these stocks’ market caps are similar to HALO’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PSB 20 123459 3
EME 29 191491 5
FGEN 25 310554 3
CRUS 33 315676 5
SLGN 19 183360 3
SRC 18 154998 0
UBSI 16 44023 3
Average 22.9 189080 3.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.9 hedge funds with bullish positions and the average amount invested in these stocks was $189 million. That figure was $247 million in HALO’s case. Cirrus Logic, Inc. (NASDAQ:CRUS) is the most popular stock in this table. On the other hand United Bankshares, Inc. (NASDAQ:UBSI) is the least popular one with only 16 bullish hedge fund positions. Halozyme Therapeutics, Inc. (NASDAQ:HALO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HALO is 67.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 21.3% in 2020 through September 25th and beat the market by 17.7 percentage points. Unfortunately HALO wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on HALO were disappointed as the stock returned -2.8% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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Disclosure: None. This article was originally published at Insider Monkey.