Were Hedge Funds Right About Halliburton Company (HAL)?

At Insider Monkey, we pore over the filings of nearly 873 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of June 30th. In this article, we will use that wealth of knowledge to determine whether or not Halliburton Company (NYSE:HAL) makes for a good investment right now.

Is Halliburton Company (NYSE:HAL) a bargain? Money managers were getting more optimistic. The number of bullish hedge fund bets improved by 1 lately. Halliburton Company (NYSE:HAL) was in 29 hedge funds’ portfolios at the end of June. The all time high for this statistic is 62. Our calculations also showed that HAL isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now we’re going to take a look at the fresh hedge fund action encompassing Halliburton Company (NYSE:HAL).

Do Hedge Funds Think HAL Is A Good Stock To Buy Now?

At the end of June, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of 4% from one quarter earlier. By comparison, 30 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.

The largest stake in Halliburton Company (NYSE:HAL) was held by Pzena Investment Management, which reported holding $889.4 million worth of stock at the end of June. It was followed by Holocene Advisors with a $111.1 million position. Other investors bullish on the company included Fisher Asset Management, Millennium Management, and Capital Growth Management. In terms of the portfolio weights assigned to each position Pzena Investment Management allocated the biggest weight to Halliburton Company (NYSE:HAL), around 3.46% of its 13F portfolio. Covalent Capital Partners is also relatively very bullish on the stock, earmarking 2.95 percent of its 13F equity portfolio to HAL.

Now, some big names have jumped into Halliburton Company (NYSE:HAL) headfirst. Capital Growth Management, managed by Ken Heebner, created the largest position in Halliburton Company (NYSE:HAL). Capital Growth Management had $30.1 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $9 million position during the quarter. The other funds with brand new HAL positions are Matthew Hulsizer’s PEAK6 Capital Management, Clint Carlson’s Carlson Capital, and Anand Parekh’s Alyeska Investment Group.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Halliburton Company (NYSE:HAL) but similarly valued. We will take a look at Take-Two Interactive Software, Inc. (NASDAQ:TTWO), Steris Plc (NYSE:STE), Trimble Inc. (NASDAQ:TRMB), Ingersoll Rand Inc. (NYSE:IR), Ameren Corporation (NYSE:AEE), Fox Corporation (NASDAQ:FOX), and ZoomInfo Technologies Inc. (NASDAQ:ZI). All of these stocks’ market caps are similar to HAL’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 33 hedge funds with bullish positions and the average amount invested in these stocks was $1035 million. That figure was $1336 million in HAL’s case. Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is the most popular stock in this table. On the other hand Ameren Corporation (NYSE:AEE) is the least popular one with only 23 bullish hedge fund positions. Halliburton Company (NYSE:HAL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for HAL is 29.4. 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 negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 through November 5th and surpassed the market again by 3.1 percentage points. Unfortunately HAL wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); HAL investors were disappointed as the stock returned 7% since the end of June (through 11/5) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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