Should You Buy Halliburton Company (HAL)?

We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Halliburton Company (NYSE:HAL) based on that data.

Is Halliburton Company (NYSE:HAL) the right investment to pursue these days? Investors who are in the know are getting more optimistic. The number of bullish hedge fund bets improved by 1 recently. Our calculations also showed that HAL 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.

If you’d ask most investors, hedge funds are seen as slow, old financial vehicles of yesteryear. While there are more than 8000 funds trading at the moment, We look at the masters of this club, around 850 funds. These hedge fund managers shepherd the majority of all hedge funds’ total asset base, and by keeping an eye on their unrivaled stock picks, Insider Monkey has brought to light various investment strategies that have historically outpaced the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .


Ken Fisher of Fisher Asset Management

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. Now we’re going to go over the key hedge fund action encompassing Halliburton Company (NYSE:HAL).

What have hedge funds been doing with Halliburton Company (NYSE:HAL)?

At the end of the first quarter, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from the fourth quarter of 2019. By comparison, 38 hedge funds held shares or bullish call options in HAL 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.

More specifically, Pzena Investment Management was the largest shareholder of Halliburton Company (NYSE:HAL), with a stake worth $319.7 million reported as of the end of September. Trailing Pzena Investment Management was Laurion Capital Management, which amassed a stake valued at $41.9 million. Citadel Investment Group, Fisher Asset Management, and D E Shaw 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 Pzena Investment Management allocated the biggest weight to Halliburton Company (NYSE:HAL), around 2.42% of its 13F portfolio. Encompass Capital Advisors is also relatively very bullish on the stock, earmarking 1.62 percent of its 13F equity portfolio to HAL.

Consequently, specific money managers were breaking ground themselves. Laurion Capital Management, managed by Benjamin A. Smith, assembled the biggest position in Halliburton Company (NYSE:HAL). Laurion Capital Management had $41.9 million invested in the company at the end of the quarter. Todd J. Kantor’s Encompass Capital Advisors also initiated a $15.1 million position during the quarter. The following funds were also among the new HAL investors: Renaissance Technologies, Greg Eisner’s Engineers Gate Manager, and David Costen Haley’s HBK Investments.

Let’s now take a look at hedge fund activity in other stocks similar to Halliburton Company (NYSE:HAL). We will take a look at Entegris Inc (NASDAQ:ENTG), Omega Healthcare Investors Inc (NYSE:OHI), 10x Genomics, Inc. (NASDAQ:TXG), and PulteGroup, Inc. (NYSE:PHM). This group of stocks’ market valuations match HAL’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ENTG 19 488063 -5
OHI 17 152576 -1
TXG 20 166530 8
PHM 36 465706 2
Average 23 318219 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $318 million. That figure was $514 million in HAL’s case. PulteGroup, Inc. (NYSE:PHM) is the most popular stock in this table. On the other hand Omega Healthcare Investors Inc (NYSE:OHI) is the least popular one with only 17 bullish hedge fund positions. Halliburton Company (NYSE:HAL) is not the most popular stock in this group but hedge fund interest is still above 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 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on HAL as the stock returned 71.5% in Q2 (through the end of May) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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