In this article you are going to find out whether hedge funds think Halozyme Therapeutics, Inc. (NASDAQ:HALO) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Halozyme Therapeutics, Inc. (NASDAQ:HALO) shareholders have witnessed a decrease in enthusiasm from smart money recently. HALO was in 23 hedge funds’ portfolios at the end of March. There were 25 hedge funds in our database with HALO holdings at the end of the previous quarter. Our calculations also showed that HALO isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a peek at the recent hedge fund action regarding Halozyme Therapeutics, Inc. (NASDAQ:HALO).
What does smart money think about Halozyme Therapeutics, Inc. (NASDAQ:HALO)?
At Q1’s end, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from the fourth quarter of 2019. By comparison, 18 hedge funds held shares or bullish call options in HALO a year ago. 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, D E Shaw, managed by D. E. Shaw, holds the largest position in Halozyme Therapeutics, Inc. (NASDAQ:HALO). D E Shaw has a $34.2 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is John Overdeck and David Siegel of Two Sigma Advisors, with a $27.5 million position; 0.1% of its 13F portfolio is allocated to the company. Other professional money managers that are bullish encompass Ken Fisher’s Fisher Asset Management, Phill Gross and Robert Atchinson’s Adage Capital Management and Christopher James’s Partner Fund Management. In terms of the portfolio weights assigned to each position Partner Fund Management allocated the biggest weight to Halozyme Therapeutics, Inc. (NASDAQ:HALO), around 0.91% of its 13F portfolio. Portolan Capital Management is also relatively very bullish on the stock, setting aside 0.83 percent of its 13F equity portfolio to HALO.
Seeing as Halozyme Therapeutics, Inc. (NASDAQ:HALO) has faced declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there exists a select few money managers that decided to sell off their positions entirely heading into Q4. Interestingly, Matt Sirovich and Jeremy Mindich’s Scopia Capital dumped the biggest investment of the 750 funds followed by Insider Monkey, worth an estimated $13.1 million in stock, and Peter Algert and Kevin Coldiron’s Algert Coldiron Investors was right behind this move, as the fund sold off about $1.6 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Halozyme Therapeutics, Inc. (NASDAQ:HALO) but similarly valued. These stocks are ChemoCentryx Inc (NASDAQ:CCXI), JetBlue Airways Corporation (NASDAQ:JBLU), Lazard Ltd (NYSE:LAZ), and Valvoline Inc. (NYSE:VVV). This group of stocks’ market valuations match HALO’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 30 hedge funds with bullish positions and the average amount invested in these stocks was $369 million. That figure was $154 million in HALO’s case. Valvoline Inc. (NYSE:VVV) is the most popular stock in this table. On the other hand Lazard Ltd (NYSE:LAZ) is the least popular one with only 15 bullish hedge fund positions. Halozyme Therapeutics, Inc. (NASDAQ:HALO) is not the least popular stock in this group but hedge fund interest is still below average. 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 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on HALO as the stock returned 29.4% during the second quarter and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.