Hedge Funds Have Never Been This Bullish On Lockheed Martin (LMT)

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Lockheed Martin Corporation (NYSE:LMT).

Lockheed Martin Corporation (NYSE:LMT) was in 58 hedge funds’ portfolios at the end of June. The all time high for this statistic is 55. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. LMT has experienced an increase in activity from the world’s largest hedge funds of late. There were 50 hedge funds in our database with LMT positions at the end of the first quarter. Our calculations also showed that LMT isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

David Siegel of Two Sigma Advisors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we’re going to take a gander at the recent hedge fund action regarding Lockheed Martin Corporation (NYSE:LMT).

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

At the end of June, a total of 58 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 16% from the first quarter of 2020. By comparison, 53 hedge funds held shares or bullish call options in LMT a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Lockheed Martin Corporation (NYSE:LMT) was held by Citadel Investment Group, which reported holding $380.5 million worth of stock at the end of June. It was followed by Citadel Investment Group with a $233.3 million position. Other investors bullish on the company included Arrowstreet Capital, Two Sigma Advisors, and D E Shaw. In terms of the portfolio weights assigned to each position Heard Capital allocated the biggest weight to Lockheed Martin Corporation (NYSE:LMT), around 6.86% of its 13F portfolio. Hi-Line Capital Management is also relatively very bullish on the stock, setting aside 4.6 percent of its 13F equity portfolio to LMT.

Now, key hedge funds were leading the bulls’ herd. Point72 Asset Management, managed by Steve Cohen, initiated the most outsized position in Lockheed Martin Corporation (NYSE:LMT). Point72 Asset Management had $24.8 million invested in the company at the end of the quarter. Jaime Sterne’s Skye Global Management also initiated a $14.4 million position during the quarter. The other funds with new positions in the stock are Chen Tianqiao’s Shanda Asset Management, Paul Tudor Jones’s Tudor Investment Corp, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.

Let’s also examine hedge fund activity in other stocks similar to Lockheed Martin Corporation (NYSE:LMT). We will take a look at GlaxoSmithKline plc (NYSE:GSK), S&P Global Inc. (NYSE:SPGI), Stryker Corporation (NYSE:SYK), Micron Technology, Inc. (NASDAQ:MU), Moderna, Inc. (NASDAQ:MRNA), Uber Technologies, Inc. (NYSE:UBER), and Anthem Inc (NYSE:ANTM). This group of stocks’ market caps match LMT’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 67.6 hedge funds with bullish positions and the average amount invested in these stocks was $5636 million. That figure was $1566 million in LMT’s case. Uber Technologies, Inc. (NYSE:UBER) is the most popular stock in this table. On the other hand GlaxoSmithKline plc (NYSE:GSK) is the least popular one with only 28 bullish hedge fund positions. Lockheed Martin Corporation (NYSE:LMT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for LMT is 54. 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 negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 25.7% in 2021 through September 27th and surpassed the market again by 6.2 percentage points. Unfortunately LMT wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); LMT investors were disappointed as the stock returned -5.9% since the end of June (through 9/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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