Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Lockheed Martin Corporation (NYSE:LMT) based on that data.
Is Lockheed Martin Corporation (NYSE:LMT) a buy, sell, or hold? Hedge funds are taking a bullish view. The number of long hedge fund bets advanced by 8 recently. Our calculations also showed that LMT 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). LMT was in 55 hedge funds’ portfolios at the end of the first quarter of 2020. There were 47 hedge funds in our database with LMT positions at the end of the previous quarter.
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 44 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.
Ray Dalio of Bridgewater Associates
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this analyst’s “corona catalyst plays“. We interview hedge fund managers and ask them about best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital’s Michael Castor expects to double. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a glance at the latest hedge fund action regarding Lockheed Martin Corporation (NYSE:LMT).
How are hedge funds trading Lockheed Martin Corporation (NYSE:LMT)?
At Q1’s end, a total of 55 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 17% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards LMT over the last 18 quarters. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Adage Capital Management, managed by Phill Gross and Robert Atchinson, holds the largest position in Lockheed Martin Corporation (NYSE:LMT). Adage Capital Management has a $348.2 million position in the stock, comprising 1% of its 13F portfolio. On Adage Capital Management’s heels is Rajiv Jain of GQG Partners, with a $235.1 million position; the fund has 1.6% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism contain D. E. Shaw’s D E Shaw, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Cliff Asness’s AQR Capital Management. In terms of the portfolio weights assigned to each position Shanda Asset Management allocated the biggest weight to Lockheed Martin Corporation (NYSE:LMT), around 5.48% of its 13F portfolio. Jade Capital Advisors is also relatively very bullish on the stock, setting aside 5.45 percent of its 13F equity portfolio to LMT.
As industrywide interest jumped, specific money managers were leading the bulls’ herd. Citadel Investment Group, managed by Ken Griffin, created the biggest position in Lockheed Martin Corporation (NYSE:LMT). Citadel Investment Group had $99 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $67.9 million position during the quarter. The following funds were also among the new LMT investors: Chen Tianqiao’s Shanda Asset Management, Louis Bacon’s Moore Global Investments, and Ray Dalio’s Bridgewater Associates.
Let’s now review hedge fund activity in other stocks similar to Lockheed Martin Corporation (NYSE:LMT). We will take a look at GlaxoSmithKline plc (NYSE:GSK), Broadcom Inc (NASDAQ:AVGO), Honeywell International Inc. (NYSE:HON), and Gilead Sciences, Inc. (NASDAQ:GILD). This group of stocks’ market caps are similar to LMT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GSK | 27 | 1953128 | 1 |
| AVGO | 50 | 1720031 | -11 |
| HON | 44 | 1215105 | -11 |
| GILD | 76 | 2832662 | 9 |
| Average | 49.25 | 1930232 | -3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 49.25 hedge funds with bullish positions and the average amount invested in these stocks was $1930 million. That figure was $1506 million in LMT’s case. Gilead Sciences, Inc. (NASDAQ:GILD) is the most popular stock in this table. On the other hand GlaxoSmithKline plc (NYSE:GSK) is the least popular one with only 27 bullish hedge fund positions. Lockheed Martin Corporation (NYSE:LMT) is not the most popular stock in this group but hedge fund interest is still above average. 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 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 gained 7.9% in 2020 through May 22nd but beat the market by 15.6 percentage points. Unfortunately LMT wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on LMT were disappointed as the stock returned 8.9% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
