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Is Horizon Therapeutics Public Limited Company (NASDAQ:HZNP) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Is HZNP a good stock to buy now? The smart money was getting more bullish. The number of bullish hedge fund bets advanced by 16 recently. Horizon Therapeutics Public Limited Company (NASDAQ:HZNP) was in 61 hedge funds' portfolios at the end of September. The all time high for this statistics is 45. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that HZNP isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 45 hedge funds in our database with HZNP holdings at the end of June.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
John Paulson of Paulson & Co
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets. Tesla’s stock price skyrocketed, yet lithium prices are still below their 2019 highs. So, we are checking out this lithium stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. 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 website. With all of this in mind we're going to take a look at the latest hedge fund action surrounding Horizon Therapeutics Public Limited Company (NASDAQ:HZNP).
How have hedgies been trading Horizon Therapeutics Public Limited Company (NASDAQ:HZNP)?
At Q3's end, a total of 61 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 36% from the previous quarter. By comparison, 33 hedge funds held shares or bullish call options in HZNP a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Horizon Therapeutics Public Limited Company (NASDAQ:HZNP), with a stake worth $682.1 million reported as of the end of September. Trailing Renaissance Technologies was Avoro Capital Advisors (venBio Select Advisor), which amassed a stake valued at $594.3 million. Paulson & Co, Adage Capital 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 Paulson & Co allocated the biggest weight to Horizon Therapeutics Public Limited Company (NASDAQ:HZNP), around 16.2% of its 13F portfolio. Eversept Partners is also relatively very bullish on the stock, dishing out 10.62 percent of its 13F equity portfolio to HZNP.
As one would reasonably expect, key money managers have jumped into Horizon Therapeutics Public Limited Company (NASDAQ:HZNP) headfirst. Rock Springs Capital Management, managed by Kris Jenner, Gordon Bussard, Graham McPhail, assembled the most outsized position in Horizon Therapeutics Public Limited Company (NASDAQ:HZNP). Rock Springs Capital Management had $50.5 million invested in the company at the end of the quarter. Steve Cohen's Point72 Asset Management also made a $34.4 million investment in the stock during the quarter. The other funds with brand new HZNP positions are Farallon Capital, Michael Castor's Sio Capital, and Philip Hempleman's Ardsley Partners.
Let's now review hedge fund activity in other stocks similar to Horizon Therapeutics Public Limited Company (NASDAQ:HZNP). We will take a look at Kansas City Southern (NYSE:KSU), CDW Corporation (NASDAQ:CDW), Citrix Systems, Inc. (NASDAQ:CTXS), Fox Corporation (NASDAQ:FOX), Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY), Check Point Software Technologies Ltd. (NASDAQ:CHKP), and NatWest Group plc (NYSE:NWG). This group of stocks' market caps are closest to HZNP's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KSU,53,1074081,6 CDW,30,1334920,-10 CTXS,31,643896,-5 FOX,15,579708,-5 ALNY,35,902645,-3 CHKP,27,820557,-1 NWG,2,2622,-3 Average,27.6,765490,-3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.6 hedge funds with bullish positions and the average amount invested in these stocks was $765 million. That figure was $4039 million in HZNP's case. Kansas City Southern (NYSE:KSU) is the most popular stock in this table. On the other hand NatWest Group plc (NYSE:NWG) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Horizon Therapeutics Public Limited Company (NASDAQ:HZNP) is more popular among hedge funds. Our overall hedge fund sentiment score for HZNP is 90. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. Unfortunately HZNP wasn't nearly as popular as these 20 stocks and hedge funds that were betting on HZNP were disappointed as the stock returned -10.5% since the end of the third quarter (through 12/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.