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Hedge Funds Are Cashing Out Of Halozyme Therapeutics, Inc. (HALO)

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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.

Is Halozyme Therapeutics, Inc. (NASDAQ:HALO) going to take off soon? Money managers were getting less bullish. The number of bullish hedge fund bets fell by 2 in recent months. Halozyme Therapeutics, Inc. (NASDAQ:HALO) was in 23 hedge funds' portfolios at the end of March. The all time high for this statistic is 26. Our calculations also showed that HALO isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. 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 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.

Roger Ibbotson of Zebra Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery 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 Halozyme Therapeutics, Inc. (NASDAQ:HALO).

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

At first quarter's end, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in HALO over the last 23 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Fisher Asset Management held the most valuable stake in Halozyme Therapeutics, Inc. (NASDAQ:HALO), which was worth $37.4 million at the end of the fourth quarter. On the second spot was D E Shaw which amassed $36.2 million worth of shares. Healthcor Management LP, Renaissance Technologies, and Driehaus Capital 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 SilverArc Capital allocated the biggest weight to Halozyme Therapeutics, Inc. (NASDAQ:HALO), around 2.39% of its 13F portfolio. Kent Lake Capital is also relatively very bullish on the stock, dishing out 1.44 percent of its 13F equity portfolio to HALO.

Seeing as Halozyme Therapeutics, Inc. (NASDAQ:HALO) has witnessed declining sentiment from the entirety of the hedge funds we track, logic holds that there lies a certain "tier" of funds that elected to cut their entire stakes last quarter. It's worth mentioning that Noam Gottesman's GLG Partners dumped the biggest stake of the "upper crust" of funds watched by Insider Monkey, worth about $4.1 million in stock. David Harding's fund, Winton Capital Management, also dropped its stock, about $2.1 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 2 funds last quarter.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Halozyme Therapeutics, Inc. (NASDAQ:HALO) but similarly valued. These stocks are Choice Hotels International, Inc. (NYSE:CHH), American Campus Communities, Inc. (NYSE:ACC), Acuity Brands, Inc. (NYSE:AYI), Popular Inc (NASDAQ:BPOP), SYNNEX Corporation (NYSE:SNX), Sarepta Therapeutics Inc (NASDAQ:SRPT), and Duck Creek Technologies, Inc. (NASDAQ:DCT). This group of stocks' market values are closest to HALO's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CHH,17,123430,2 ACC,26,231239,11 AYI,31,969322,2 BPOP,34,873784,-1 SNX,15,614677,-9 SRPT,33,526911,-4 DCT,19,310721,-3 Average,25,521441,-0.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $521 million. That figure was $211 million in HALO's case. Popular Inc (NASDAQ:BPOP) is the most popular stock in this table. On the other hand SYNNEX Corporation (NYSE:SNX) 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 overall hedge fund sentiment score for HALO is 50.6. 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 23.8% in 2021 through July 16th and surpassed the market again by 7.7 percentage points. Unfortunately HALO wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); HALO investors were disappointed as the stock returned 0.9% since the end of March (through 7/16) 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.