Were Hedge Funds Right About Dumping Halliburton Company (HAL)?

Halliburton Company (NYSE:HAL) was in 34 hedge funds’ portfolios at the end of December. HAL has experienced a decrease in hedge fund sentiment of late. There were 39 hedge funds in our database with HAL positions at the end of the previous quarter. Our calculations also showed that HAL isn’t among the 30 most popular stocks among hedge funds.

If you’d ask most shareholders, hedge funds are viewed as worthless, outdated investment tools of yesteryear. While there are over 8000 funds with their doors open at present, Our researchers choose to focus on the bigwigs of this group, about 750 funds. Most estimates calculate that this group of people manage most of the smart money’s total capital, and by tracking their matchless investments, Insider Monkey has deciphered many investment strategies that have historically outrun the S&P 500 index. Insider Monkey’s flagship hedge fund strategy exceeded the S&P 500 index by nearly 5 percentage points annually since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.

Dmitry Balyasny

We’re going to review the recent hedge fund action surrounding Halliburton Company (NYSE:HAL).

Hedge fund activity in Halliburton Company (NYSE:HAL)

At the end of the fourth quarter, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from one quarter earlier. On the other hand, there were a total of 51 hedge funds with a bullish position in HAL a year ago. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).


More specifically, Pzena Investment Management was the largest shareholder of Halliburton Company (NYSE:HAL), with a stake worth $169 million reported as of the end of September. Trailing Pzena Investment Management was Two Sigma Advisors, which amassed a stake valued at $144.6 million. Citadel Investment Group, D E Shaw, and Balyasny Asset Management were also very fond of the stock, giving the stock large weights in their portfolios.

Since Halliburton Company (NYSE:HAL) has faced bearish sentiment from hedge fund managers, it’s easy to see that there lies a certain “tier” of hedge funds that elected to cut their full holdings in the third quarter. Interestingly, David Zusman’s Talara Capital Management said goodbye to the largest investment of the 700 funds followed by Insider Monkey, totaling an estimated $15.8 million in stock, and Malcolm Fairbairn’s Ascend Capital was right behind this move, as the fund dumped about $12 million worth. These transactions are interesting, as total hedge fund interest was cut by 5 funds in the third quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Halliburton Company (NYSE:HAL) but similarly valued. These stocks are General Mills, Inc. (NYSE:GIS), Square, Inc. (NYSE:SQ), Wipro Limited (NYSE:WIT), and IQVIA Holdings, Inc. (NYSE:IQV). This group of stocks’ market caps resemble HAL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GIS 37 405469 5
SQ 35 840921 12
WIT 10 78086 2
IQV 49 4512859 1
Average 32.75 1459334 5

View table here if you experience formatting issues.

As you can see these stocks had an average of 32.75 hedge funds with bullish positions and the average amount invested in these stocks was $1459 million. That figure was $559 million in HAL’s case. IQVIA Holdings, Inc. (NYSE:IQV) is the most popular stock in this table. On the other hand Wipro Limited (NYSE:WIT) is the least popular one with only 10 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. 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 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Unfortunately HAL wasn’t in this group. Hedge funds that bet on HAL were disappointed as the stock returned 5.8% and underperformed the market. If you are interested in investing in large cap stocks, you should check out the top 15 hedge fund stocks as 13 of these outperformed the market.

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