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) was in 23 hedge funds’ portfolios at the end of the fourth quarter of 2018. HRS investors should be aware of a decrease in enthusiasm from smart money recently. There were 27 hedge funds in our database with HRS positions at the end of the previous quarter. Our calculations also showed that HRS isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let’s take a gander at the new hedge fund action surrounding Harris Corporation (NYSE:HRS).
How have hedgies been trading Harris Corporation (NYSE:HRS)?
At Q4’s end, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of -15% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards HRS over the last 14 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
More specifically, Citadel Investment Group was the largest shareholder of Harris Corporation (NYSE:HRS), with a stake worth $213.3 million reported as of the end of September. Trailing Citadel Investment Group was Holocene Advisors, which amassed a stake valued at $90.2 million. Ashler Capital, Renaissance Technologies, and Two Sigma Advisors were also very fond of the stock, giving the stock large weights in their portfolios.
Because Harris Corporation (NYSE:HRS) has witnessed bearish sentiment from hedge fund managers, we can see that there was a specific group of funds that elected to cut their full holdings heading into Q3. It’s worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital said goodbye to the biggest position of the “upper crust” of funds watched by Insider Monkey, worth an estimated $76.1 million in stock. Joel Greenblatt’s fund, Gotham Asset Management, also cut its stock, about $17.1 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 4 funds heading into Q3.
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 Grifols SA (NASDAQ:GRFS), Lululemon Athletica inc. (NASDAQ:LULU), Liberty Global plc (NASDAQ:LBTYA), and IDEXX Laboratories, Inc. (NASDAQ:IDXX). This group of stocks’ market values are similar to HRS’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GRFS | 14 | 185775 | 2 |
| LULU | 36 | 932595 | -9 |
| LBTYA | 32 | 1236410 | -7 |
| IDXX | 33 | 784402 | -2 |
| Average | 28.75 | 784796 | -4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.75 hedge funds with bullish positions and the average amount invested in these stocks was $785 million. That figure was $678 million in HRS’s case. Lululemon Athletica inc. (NASDAQ:LULU) is the most popular stock in this table. On the other hand Grifols SA (NASDAQ:GRFS) is the least popular one with only 14 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. Our calculations showed that top 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Hedge funds were also right about betting on Harris as the stock returned 19.8% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
