Before we spend days researching a stock idea we'd like to take a look at how hedge funds and billionaire investors recently traded that stock. S&P 500 Index ETF (SPY) lost 13.5% in the fourth quarter. Seven out of 11 industry groups in the S&P 500 Index were down more than 20% from their 52-week highs at the trough of the stock market crash. The average return of a randomly picked stock in the index was even worse. This means you (or a monkey throwing a dart) have less than an even chance of beating the market by randomly picking a stock. On the other hand, the top 15 most popular S&P 500 stocks among hedge funds not only recouped their Q4 losses but also outperformed the index by more than 3 percentage points. In this article, we will take a look at what hedge funds think about Halozyme Therapeutics, Inc. (NASDAQ:HALO).
Halozyme Therapeutics, Inc. (NASDAQ:HALO) was in 16 hedge funds' portfolios at the end of the fourth quarter of 2018. HALO investors should pay attention to a decrease in hedge fund interest lately. There were 21 hedge funds in our database with HALO positions at the end of the previous quarter. Our calculations also showed that halo isn't among the 30 most popular stocks among hedge funds.
In the financial world there are plenty of tools market participants use to analyze publicly traded companies. Two of the best tools are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the top picks of the elite money managers can beat their index-focused peers by a healthy amount (see the details here).
We're going to take a gander at the latest hedge fund action regarding Halozyme Therapeutics, Inc. (NASDAQ:HALO).
How have hedgies been trading Halozyme Therapeutics, Inc. (NASDAQ:HALO)?
At the end of the fourth quarter, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of -24% from one quarter earlier. On the other hand, there were a total of 25 hedge funds with a bullish position in HALO a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists an "upper tier" of key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
More specifically, Iridian Asset Management was the largest shareholder of Halozyme Therapeutics, Inc. (NASDAQ:HALO), with a stake worth $132.1 million reported as of the end of September. Trailing Iridian Asset Management was GLG Partners, which amassed a stake valued at $19 million. Fisher Asset Management, Two Sigma Advisors, and D E Shaw were also very fond of the stock, giving the stock large weights in their portfolios.
Because Halozyme Therapeutics, Inc. (NASDAQ:HALO) has experienced bearish sentiment from the smart money, it's easy to see that there lies a certain "tier" of money managers that decided to sell off their full holdings heading into Q3. Intriguingly, Marc Lisker, Glenn Fuhrman and John Phelan's MSDC Management sold off the largest stake of all the hedgies tracked by Insider Monkey, totaling about $40.8 million in stock, and Israel Englander's Millennium Management was right behind this move, as the fund said goodbye to about $1.3 million worth. These moves are interesting, as total hedge fund interest dropped by 5 funds heading into Q3.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Halozyme Therapeutics, Inc. (NASDAQ:HALO) but similarly valued. These stocks are First Midwest Bancorp Inc (NASDAQ:FMBI), Werner Enterprises, Inc. (NASDAQ:WERN), Cogent Communications Holdings, Inc. (NASDAQ:CCOI), and Apergy Corporation (NYSE:APY). This group of stocks' market values match HALO's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FMBI,12,64807,4 WERN,14,104958,-3 CCOI,17,219059,5 APY,13,115501,-7 Average,14,126081,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $126 million. That figure was $199 million in HALO's case. Cogent Communications Holdings, Inc. (NASDAQ:CCOI) is the most popular stock in this table. On the other hand First Midwest Bancorp Inc (NASDAQ:FMBI) is the least popular one with only 12 bullish hedge fund positions. Halozyme Therapeutics, Inc. (NASDAQ:HALO) 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 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately HALO wasn't nearly as popular as these 15 stock and hedge funds that were betting on HALO were disappointed as the stock returned 10% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.