The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st, a week after the market trough. We are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article we look at how hedge funds traded Horizon Therapeutics Public Limited Company (NASDAQ:HZNP) and determine whether the smart money was really smart about this stock.
Horizon Therapeutics Public Limited Company (NASDAQ:HZNP) investors should be aware of an increase in activity from the world's largest hedge funds in recent months. Our calculations also showed that HZNP isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). 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 58 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 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_262340" align="aligncenter" width="397"] Arthur B Cohen and Joseph Healey of Healthcor Management LP[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, this trader claims to score lucrative profits by utilizing a "weekend trading strategy", so we look into his strategy's picks. Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost gold prices. So, we are checking out this junior gold mining stock. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller's investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now let's go over the key hedge fund action regarding Horizon Therapeutics Public Limited Company (NASDAQ:HZNP).
How are hedge funds trading Horizon Therapeutics Public Limited Company (NASDAQ:HZNP)?
At Q1's end, a total of 41 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 24% from one quarter earlier. On the other hand, there were a total of 41 hedge funds with a bullish position in HZNP a year ago. With the smart money's capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Horizon Therapeutics Public Limited Company (NASDAQ:HZNP), which was worth $314.7 million at the end of the third quarter. On the second spot was Paulson & Co which amassed $242 million worth of shares. Deerfield Management, Avoro Capital Advisors (venBio Select Advisor), 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 9.23% of its 13F portfolio. Iron Triangle Partners is also relatively very bullish on the stock, designating 5.73 percent of its 13F equity portfolio to HZNP.
Consequently, some big names have been driving this bullishness. Viking Global, managed by Andreas Halvorsen, initiated the most outsized position in Horizon Therapeutics Public Limited Company (NASDAQ:HZNP). Viking Global had $59 million invested in the company at the end of the quarter. Henrik Rhenman's Rhenman & Partners Asset Management also made a $29.6 million investment in the stock during the quarter. The following funds were also among the new HZNP investors: Arthur B Cohen and Joseph Healey's Healthcor Management LP, Julian Baker and Felix Baker's Baker Bros. Advisors, and Greg Eisner's Engineers Gate Manager.
Let's also examine hedge fund activity in other stocks similar to Horizon Therapeutics Public Limited Company (NASDAQ:HZNP). We will take a look at Jazz Pharmaceuticals Plc (NASDAQ:JAZZ), Knight-Swift Transportation Holdings Inc. (NYSE:KNX), Gentex Corporation (NASDAQ:GNTX), and UGI Corp (NYSE:UGI). This group of stocks' market valuations resemble HZNP's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position JAZZ,29,805357,4 KNX,32,352814,6 GNTX,37,478532,5 UGI,27,253339,4 Average,31.25,472511,4.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.25 hedge funds with bullish positions and the average amount invested in these stocks was $473 million. That figure was $1686 million in HZNP's case. Gentex Corporation (NASDAQ:GNTX) is the most popular stock in this table. On the other hand UGI Corp (NYSE:UGI) is the least popular one with only 27 bullish hedge fund positions. Compared to these stocks Horizon Therapeutics Public Limited Company (NASDAQ:HZNP) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 12.3% in 2020 through June 30th but still managed to beat the market by 15.5 percentage points. Hedge funds were also right about betting on HZNP as the stock returned 87.6% in Q2 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.