At Insider Monkey, we pore over the filings of nearly 887 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of December 31st. In this article, we will use that wealth of knowledge to determine whether or not Halliburton Company (NYSE:HAL) makes for a good investment right now.
Is HAL stock a buy? Halliburton Company (NYSE:HAL) has seen a decrease in support from the world’s most elite money managers of late. Halliburton Company (NYSE:HAL) was in 31 hedge funds’ portfolios at the end of December. The all time high for this statistic is 62. There were 32 hedge funds in our database with HAL holdings at the end of September. Our calculations also showed that HAL isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
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 124 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.
Clint Carlson of Carlson Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we heard that billionaire Peter Thiel is backing this biotech stock. So, we are taking a closer look at this space. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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. Now let’s analyze the key hedge fund action surrounding Halliburton Company (NYSE:HAL).
Do Hedge Funds Think HAL Is A Good Stock To Buy Now?
At Q4’s end, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -3% from the previous quarter. The graph below displays the number of hedge funds with bullish position in HAL 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.
More specifically, Pzena Investment Management was the largest shareholder of Halliburton Company (NYSE:HAL), with a stake worth $731.1 million reported as of the end of December. Trailing Pzena Investment Management was Fisher Asset Management, which amassed a stake valued at $68.7 million. Laurion Capital Management, Millennium Management, and Citadel Investment Group 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 Pzena Investment Management allocated the biggest weight to Halliburton Company (NYSE:HAL), around 3.45% of its 13F portfolio. Laurion Capital Management is also relatively very bullish on the stock, designating 0.45 percent of its 13F equity portfolio to HAL.
Because Halliburton Company (NYSE:HAL) has faced a decline in interest from hedge fund managers, we can see that there lies a certain “tier” of hedge funds that slashed their positions entirely in the fourth quarter. At the top of the heap, Till Bechtolsheimer’s Arosa Capital Management said goodbye to the biggest investment of all the hedgies followed by Insider Monkey, totaling close to $2.4 million in stock, and Parvinder Thiara’s Athanor Capital was right behind this move, as the fund dumped about $1.3 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 1 funds in the fourth quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Halliburton Company (NYSE:HAL) but similarly valued. We will take a look at Trimble Inc. (NASDAQ:TRMB), Zendesk Inc (NYSE:ZEN), Energy Transfer L.P. (NYSE:ET), HEICO Corporation (NYSE:HEI), Invitation Homes Inc. (NYSE:INVH), FirstEnergy Corp. (NYSE:FE), and Monolithic Power Systems, Inc. (NASDAQ:MPWR). This group of stocks’ market values match HAL’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TRMB | 21 | 1330232 | -14 |
| ZEN | 58 | 1858196 | -1 |
| ET | 25 | 543271 | -6 |
| HEI | 44 | 786027 | 1 |
| INVH | 27 | 833637 | -1 |
| FE | 50 | 1305329 | -9 |
| MPWR | 30 | 640635 | -7 |
| Average | 36.4 | 1042475 | -5.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 36.4 hedge funds with bullish positions and the average amount invested in these stocks was $1042 million. That figure was $1027 million in HAL’s case. Zendesk Inc (NYSE:ZEN) is the most popular stock in this table. On the other hand Trimble Inc. (NASDAQ:TRMB) is the least popular one with only 21 bullish hedge fund positions. Halliburton Company (NYSE:HAL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for HAL is 32.5. 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. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th and beat the market by 1.5 percentage points. A small number of hedge funds were also right about betting on HAL, though not to the same extent, as the stock returned 11.4% since the end of Q4 (through April 12th) and outperformed the market.
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Disclosure: None. This article was originally published at Insider Monkey.
