Here is What Hedge Funds Think About Horizon Therapeutics (HZNP)

In this article you are going to find out whether hedge funds think Horizon Therapeutics Public Limited Company (NASDAQ:HZNP) 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 Horizon Therapeutics Public Limited Company (NASDAQ:HZNP) undervalued? Money managers were selling. The number of bullish hedge fund bets dropped by 7 in recent months. Horizon Therapeutics Public Limited Company (NASDAQ:HZNP) was in 48 hedge funds’ portfolios at the end of March. 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 Q1 rankings). There were 55 hedge funds in our database with HZNP holdings at the end of December.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a 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, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. 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 peek at the new hedge fund action surrounding Horizon Therapeutics Public Limited Company (NASDAQ:HZNP).

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

At the end of March, a total of 48 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards HZNP 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.

The largest stake in Horizon Therapeutics Public Limited Company (NASDAQ:HZNP) was held by Avoro Capital Advisors (venBio Select Advisor), which reported holding $828.4 million worth of stock at the end of December. It was followed by Paulson & Co with a $735.5 million position. Other investors bullish on the company included Renaissance Technologies, OrbiMed Advisors, and Viking Global. 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 16.89% of its 13F portfolio. Avoro Capital Advisors (venBio Select Advisor) is also relatively very bullish on the stock, dishing out 14.31 percent of its 13F equity portfolio to HZNP.

Seeing as Horizon Therapeutics Public Limited Company (NASDAQ:HZNP) has faced bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there exists a select few funds that slashed their full holdings heading into Q2. Intriguingly, Principal Global Investors’s Columbus Circle Investors said goodbye to the largest stake of the 750 funds monitored by Insider Monkey, comprising about $58.3 million in stock. Alec Litowitz and Ross Laser’s fund, Magnetar Capital, also dumped its stock, about $7.8 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 7 funds heading into Q2.

Let’s now take a look at hedge fund activity in other stocks similar to Horizon Therapeutics Public Limited Company (NASDAQ:HZNP). These stocks are Ingersoll Rand Inc. (NYSE:IR), Generac Holdings Inc. (NYSE:GNRC), Tractor Supply Company (NASDAQ:TSCO), Hewlett Packard Enterprise Company (NYSE:HPE), Western Digital Corporation (NASDAQ:WDC), Take-Two Interactive Software, Inc. (NASDAQ:TTWO), and Teradyne, Inc. (NASDAQ:TER). This group of stocks’ market caps are closest to HZNP’s market cap.

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As you can see these stocks had an average of 38.6 hedge funds with bullish positions and the average amount invested in these stocks was $1153 million. That figure was $4177 million in HZNP’s case. Western Digital Corporation (NASDAQ:WDC) is the most popular stock in this table. On the other hand Hewlett Packard Enterprise Company (NYSE:HPE) is the least popular one with only 27 bullish hedge fund positions. Horizon Therapeutics Public Limited Company (NASDAQ:HZNP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HZNP is 55.5. 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 positive signal but 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 17.4% in 2021 through June 18th and beat the market again by 6.1 percentage points. Unfortunately HZNP wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on HZNP were disappointed as the stock returned 2.8% since the end of March (through 6/18) 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 many of these stocks already outperformed the market since 2019.

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