It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 5.2% over the 12-month period ending October 30, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored S&P 500 stocks by the hedge funds monitored by Insider Monkey (as of September 2014) generated a return of 9.5% over the same time span, with 63% of these stocks outperforming the benchmark. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Raytheon Company (NYSE:RTN).
Is Raytheon Company (NYSE:RTN) going to take off soon? Prominent investors are turning less bullish. The number of bullish hedge fund positions fell by 6 recently. RTN was in 31 hedge funds’ portfolios at the end of the third quarter of 2015. There were 37 hedge funds in our database with RTN holdings at the end of the previous quarter. At the end of this article we will also compare RTN to other stocks including Twenty-First Century Fox Inc (NASDAQ:FOXA), Northrop Grumman Corporation (NYSE:NOC), and T MOBILE US INC (NYSE:TMUS) to get a better sense of its popularity.
Follow Raytheon Co (NYSE:RTN)
Follow Raytheon Co (NYSE:RTN)
Now, we’re going to take a look at the recent action regarding Raytheon Company (NYSE:RTN).
How have hedgies been trading Raytheon Company (NYSE:RTN)?
At Q3’s end, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -16% from the second quarter. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Cliff Asness’ AQR Capital Management has the number one position in Raytheon Company (NYSE:RTN), worth close to $173.3 million, amounting to 0.3% of its total 13F portfolio. Sitting at the No. 2 spot is Citadel Investment Group, led by Ken Griffin, holding a $95.9 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors with similar optimism encompass Phill Gross and Robert Atchinson’s Adage Capital Management, Anand Parekh’s Alyeska Investment Group and David Harding’s Winton Capital Management.
Due to the fact that Raytheon Company (NYSE:RTN) has witnessed bearish sentiment from the aggregate hedge fund industry, we can see that there exists a select few funds that decided to sell off their entire stakes last quarter. Interestingly, Glenn Russell Dubin’s Highbridge Capital Management said goodbye to the largest stake of all the hedgies tracked by Insider Monkey, comprising close to $32.5 million in stock, and Peter Muller’s PDT Partners was right behind this move, as the fund sold off about $15.2 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 6 funds last quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Raytheon Company (NYSE:RTN) but similarly valued. We will take a look at Twenty-First Century Fox Inc (NASDAQ:FOXA), Northrop Grumman Corporation (NYSE:NOC), T MOBILE US INC (NYSE:TMUS), and Ecolab Inc. (NYSE:ECL). All of these stocks’ market caps are closest to RTN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FOXA | 56 | 4044012 | -1 |
| NOC | 37 | 1985310 | 5 |
| TMUS | 54 | 3199501 | -15 |
| ECL | 26 | 2136599 | 3 |
As you can see these stocks had an average of 43.25 hedge funds with bullish positions and the average amount invested in these stocks was $2841 million. That figure was $839 million in RTN’s case. Twenty-First Century Fox Inc (NASDAQ:FOXA) is the most popular stock in this table. On the other hand Ecolab Inc. (NYSE:ECL) is the least popular one with only 26 bullish hedge fund positions. Raytheon Company (NYSE:RTN) 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 FOXA might be a better candidate to consider a long position.
