Is HALO Stock A Buy or Sell?

How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Halozyme Therapeutics, Inc. (NASDAQ:HALO).

Is HALO stock a buy? Hedge funds were in a pessimistic mood. The number of bullish hedge fund positions decreased by 1 recently. Halozyme Therapeutics, Inc. (NASDAQ:HALO) was in 25 hedge funds’ portfolios at the end of December. The all time high for this statistic is 26. Our calculations also showed that HALO isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 26 hedge funds in our database with HALO positions at the end of the third quarter.

Lee Ainslie of Maverick Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now 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 we’re going to take a gander at the new hedge fund action regarding Halozyme Therapeutics, Inc. (NASDAQ:HALO).

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

Heading into the first quarter of 2021, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of -4% from the third quarter of 2020. Below, you can check out the change in hedge fund sentiment towards HALO over the last 22 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, D E Shaw was the largest shareholder of Halozyme Therapeutics, Inc. (NASDAQ:HALO), with a stake worth $55.3 million reported as of the end of December. Trailing D E Shaw was Fisher Asset Management, which amassed a stake valued at $38.9 million. Renaissance Technologies, Two Sigma Advisors, and Millennium Management 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 SilverArc Capital allocated the biggest weight to Halozyme Therapeutics, Inc. (NASDAQ:HALO), around 2.48% of its 13F portfolio. Kent Lake Capital is also relatively very bullish on the stock, dishing out 2.12 percent of its 13F equity portfolio to HALO.

Because Halozyme Therapeutics, Inc. (NASDAQ:HALO) has experienced bearish sentiment from the smart money, we can see that there exists a select few hedge funds who were dropping their positions entirely last quarter. Intriguingly, Phill Gross and Robert Atchinson’s Adage Capital Management sold off the largest investment of the 750 funds tracked by Insider Monkey, totaling close to $21 million in stock. Bhagwan Jay Rao’s fund, Integral Health Asset Management, also dumped its stock, about $4.1 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 1 funds last quarter.

Let’s now review hedge fund activity in other stocks similar to Halozyme Therapeutics, Inc. (NASDAQ:HALO). We will take a look at Freshpet Inc (NASDAQ:FRPT), National Instruments Corporation (NASDAQ:NATI), First American Financial Corp (NYSE:FAF), Berkeley Lights, Inc. (NASDAQ:BLI), Western Midstream Partners, LP (NYSE:WES), FLIR Systems, Inc. (NASDAQ:FLIR), and BWX Technologies Inc (NYSE:BWXT). This group of stocks’ market caps match HALO’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.1 hedge funds with bullish positions and the average amount invested in these stocks was $295 million. That figure was $204 million in HALO’s case. First American Financial Corp (NYSE:FAF) is the most popular stock in this table. On the other hand Western Midstream Partners, LP (NYSE:WES) is the least popular one with only 10 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. Our overall hedge fund sentiment score for HALO is 58.7. 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 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 12.3% in 2021 through April 19th and beat the market again by 0.9 percentage points. Unfortunately HALO wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on HALO were disappointed as the stock returned 11.4% since the end of December (through 4/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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