Huntington Ingalls Industries Inc (HII): Hedge Funds and Insiders Are Bearish, What Should You Do?

Is Huntington Ingalls Industries Inc (NYSE:HII) a worthy investment right now? The best stock pickers are turning less bullish. The number of bullish hedge fund bets shrunk by 2 in recent months.

In today’s marketplace, there are plenty of methods market participants can use to monitor the equity markets. A couple of the most useful are hedge fund and insider trading sentiment. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the top investment managers can outpace the broader indices by a healthy amount (see just how much).

Just as important, bullish insider trading sentiment is another way to break down the stock market universe. Obviously, there are many stimuli for an upper level exec to drop shares of his or her company, but only one, very simple reason why they would buy. Plenty of empirical studies have demonstrated the valuable potential of this tactic if piggybackers understand what to do (learn more here).

Keeping this in mind, let’s take a peek at the latest action surrounding Huntington Ingalls Industries Inc (NYSE:HII).

How are hedge funds trading Huntington Ingalls Industries Inc (NYSE:HII)?

At Q1’s end, a total of 20 of the hedge funds we track were long in this stock, a change of -9% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their holdings meaningfully.

When looking at the hedgies we track, Pennant Capital Management, managed by Alan Fournier, holds the biggest position in Huntington Ingalls Industries Inc (NYSE:HII). Pennant Capital Management has a $220.2 million position in the stock, comprising 4.3% of its 13F portfolio. Sitting at the No. 2 spot is Southpoint Capital Advisors, managed by Rob Butts and Josh Clark, which held a $125.9 million position; the fund has 8.1% of its 13F portfolio invested in the stock. Other hedgies that hold long positions include Ryan Heslop and Ariel Warszawski’s Firefly Value Partners, D. E. Shaw’s D E Shaw and Jim Simons’s Renaissance Technologies.

Judging by the fact that Huntington Ingalls Industries Inc (NYSE:HII) has witnessed a declination in interest from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of funds who were dropping their positions entirely at the end of the first quarter. Intriguingly, Eric Mindich’s Eton Park Capital said goodbye to the biggest stake of all the hedgies we monitor, valued at about $78 million in stock., and Jim Chanos of Kynikos was right behind this move, as the fund cut about $8 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 2 funds at the end of the first quarter.

How are insiders trading Huntington Ingalls Industries Inc (NYSE:HII)?

Bullish insider trading is most useful when the company in focus has experienced transactions within the past half-year. Over the last 180-day time period, Huntington Ingalls Industries Inc (NYSE:HII) has experienced zero unique insiders purchasing, and 6 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Huntington Ingalls Industries Inc (NYSE:HII). These stocks are Alliant Techsystems Inc. (NYSE:ATK), Teledyne Technologies Incorporated (NYSE:TDY), Hexcel Corporation (NYSE:HXL), and Spirit AeroSystems Holdings, Inc. (NYSE:SPR). This group of stocks are the members of the aerospace/defense products & services industry and their market caps match HII’s market cap.