After Many Months of Selling, Hedge Funds Are Finally Buying Harris Corporation (HRS) Again

Is Harris Corporation (NYSE:HRS) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Harris Corporation (NYSE:HRS) shareholders have witnessed an increase in activity from the world’s largest hedge funds lately. HRS was in 22 hedge funds’ portfolios at the end of September. There were 21 hedge funds in our database with HRS holdings at the end of the previous quarter. At the end of this article we will also compare HRS to other stocks including International Flavors & Fragrances Inc (NYSE:IFF), Martin Marietta Materials, Inc. (NYSE:MLM), and Masco Corporation (NYSE:MAS) to get a better sense of its popularity.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.

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What have hedge funds been doing with Harris Corporation (NYSE:HRS)?

Heading into the fourth quarter of 2016, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a 5% uptick from the previous quarter. By comparison, 31 hedge funds held shares or bullish call options in HRS heading into this year, so hedge fund ownership is still own greatly in 2016. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Barry Rosenstein’s JANA Partners has the number one position in Harris Corporation (NYSE:HRS), worth close to $221.7 million, corresponding to 3.9% of its total 13F portfolio. Coming in second is Mario Gabelli of GAMCO Investors, with a $55.6 million position. Some other peers that hold long positions comprise Jim Simons’ Renaissance Technologies, Joel Greenblatt’s Gotham Asset Management, and Israel Englander’s Millennium Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Now, key hedge funds have jumped into Harris Corporation (NYSE:HRS) headfirst. Renaissance Technologies initiated the largest position in Harris Corporation (NYSE:HRS). Renaissance Technologies had $52.5 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $7.7 million position during the quarter. The following funds were also among the new HRS investors: George Hall’s Clinton Group and Matthew Tewksbury’s Stevens Capital Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Harris Corporation (NYSE:HRS) but similarly valued. These stocks are International Flavors & Fragrances Inc (NYSE:IFF), Martin Marietta Materials, Inc. (NYSE:MLM), Masco Corporation (NYSE:MAS), and Maxim Integrated Products Inc. (NASDAQ:MXIM). All of these stocks’ market caps match HRS’s market cap.

As you can see these stocks had an average of 29 hedge funds with bullish positions and the average amount invested in these stocks was $810 million. That figure was $476 million in HRS’s case. Masco Corporation (NYSE:MAS) is the most popular stock in this table. On the other hand International Flavors & Fragrances Inc (NYSE:IFF) is the least popular one with only 16 bullish hedge fund positions. Harris Corporation (NYSE:HRS) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard MAS might be a better candidate to consider taking a long position in.

Disclosure: None