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Was The Smart Money Right About Horizon Therapeutics (HZNP)?

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Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Horizon Therapeutics Public Limited Company (NASDAQ:HZNP), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Is Horizon Therapeutics Public Limited Company (NASDAQ:HZNP) the right investment to pursue these days? Investors who are in the know were reducing their bets on the stock. The number of long hedge fund positions fell by 6 in recent months. Horizon Therapeutics Public Limited Company (NASDAQ:HZNP) was in 55 hedge funds' portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 61. Our calculations also showed that HZNP isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 61 hedge funds in our database with HZNP positions at the end of the third quarter.

To most traders, hedge funds are viewed as underperforming, old investment vehicles of the past. While there are more than 8000 funds trading today, We hone in on the aristocrats of this club, around 850 funds. These hedge fund managers orchestrate bulk of the hedge fund industry's total asset base, and by keeping track of their inimitable stock picks, Insider Monkey has found numerous investment strategies that have historically outrun Mr. Market. Insider Monkey's flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 197% since March 2017 (through March 2021) and beat the S&P 500 Index by 124 percentage points. You can download a sample issue of this newsletter on our website .

PAULSON & CO
PAULSON & CO

John Paulson of Paulson & Co

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell 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. With all of this in mind let's view the recent hedge fund action regarding Horizon Therapeutics Public Limited Company (NASDAQ:HZNP).

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

At fourth quarter's end, a total of 55 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -10% from the third quarter of 2020. Below, you can check out the change in hedge fund sentiment towards HZNP over the last 22 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Horizon Therapeutics Public Limited Company (NASDAQ:HZNP) was held by Avoro Capital Advisors (venBio Select Advisor), which reported holding $658.4 million worth of stock at the end of December. It was followed by Paulson & Co with a $584.6 million position. Other investors bullish on the company included Renaissance Technologies, Viking Global, and Perceptive Advisors. 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 15.17% of its 13F portfolio. Avoro Capital Advisors (venBio Select Advisor) is also relatively very bullish on the stock, designating 11.34 percent of its 13F equity portfolio to HZNP.

Since Horizon Therapeutics Public Limited Company (NASDAQ:HZNP) has witnessed declining sentiment from hedge fund managers, it's safe to say that there exists a select few fund managers that decided to sell off their full holdings in the fourth quarter. At the top of the heap, James E. Flynn's Deerfield Management dropped the largest position of all the hedgies watched by Insider Monkey, worth an estimated $142.4 million in stock. Steve Cohen's fund, Point72 Asset Management, also said goodbye to its stock, about $34.4 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 6 funds in the fourth quarter.

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 Occidental Petroleum Corporation (NYSE:OXY), Expeditors International of Washington, Inc. (NASDAQ:EXPD), PerkinElmer, Inc. (NYSE:PKI), Quest Diagnostics Incorporated (NYSE:DGX), Nucor Corporation (NYSE:NUE), KeyCorp (NYSE:KEY), and Citrix Systems, Inc. (NASDAQ:CTXS). This group of stocks' market values resemble HZNP's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OXY,49,2151233,6 EXPD,25,477813,-6 PKI,31,1978722,-5 DGX,45,531778,3 NUE,29,138612,1 KEY,29,317740,-4 CTXS,29,352466,-2 Average,33.9,849766,-1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 33.9 hedge funds with bullish positions and the average amount invested in these stocks was $850 million. That figure was $3793 million in HZNP's case. Occidental Petroleum Corporation (NYSE:OXY) is the most popular stock in this table. On the other hand Expeditors International of Washington, Inc. (NASDAQ:EXPD) is the least popular one with only 25 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 76. 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 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks returned 13.6% in 2021 through April 30th but still managed to beat the market by 1.6 percentage points. Hedge funds were also right about betting on HZNP as the stock returned 29.4% since the end of December (through 4/30) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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

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