Is Huntington Ingalls Industries Inc (NYSE:HII) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from industry insiders. They fail miserably sometimes but historically their consensus stock picks outperformed the market after adjusting for known risk factors.
Huntington Ingalls Industries Inc (NYSE:HII) investors should pay attention to an increase in support from the world’s most elite money managers in recent months. HII was in 32 hedge funds’ portfolios at the end of September, up by one from the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Rite Aid Corporation (NYSE:RAD), Varian Medical Systems, Inc. (NYSE:VAR), and Quintiles Transnational Holdings Inc (NYSE:Q) to gather more data points.
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How are hedge funds trading Huntington Ingalls Industries Inc (NYSE:HII)?
Heading into the fourth quarter of 2016, a total of 32 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 3% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Cliff Asness’ AQR Capital Management has the biggest position in Huntington Ingalls Industries Inc (NYSE:HII), worth close to $245 million. The second largest stake is held by Renaissance Technologies, led by Jim Simons, holding a $103.9 million position. Some other professional money managers that are bullish include D. E. Shaw’s D E Shaw, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and John Overdeck and David Siegel’s Two Sigma Advisors.
As industrywide interest jumped, specific money managers were leading the bulls’ herd. Clinton Group, managed by George Hall, created the most outsized position in Huntington Ingalls Industries Inc (NYSE:HII). Clinton Group had $10.3 million invested in the company at the end of the quarter. Glenn Russell Dubin’s Highbridge Capital Management also initiated a $4.3 million position during the quarter. The following funds were also among the new HII investors: Ken Griffin’s Citadel Investment Group, Stanley Shopkorn and Douglas Day’s Hilltop Park Associates, and Simon Sadler’s Segantii Capital.
Let’s check out hedge fund activity in other stocks similar to Huntington Ingalls Industries Inc (NYSE:HII). These stocks are Rite Aid Corporation (NYSE:RAD), Varian Medical Systems, Inc. (NYSE:VAR), Quintiles Transnational Holdings Inc (NYSE:Q), and UGI Corp (NYSE:UGI). This group of stocks’ market caps are similar to HII’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RAD | 54 | 1302618 | 4 |
| VAR | 15 | 187765 | -2 |
| Q | 34 | 1253724 | -3 |
| UGI | 16 | 310805 | -2 |
As you can see these stocks had an average of 30 hedge funds with bullish positions and the average amount invested in these stocks was $764 million. That figure was $601 million in HII’s case. Rite Aid Corporation (NYSE:RAD) is the most popular stock in this table. On the other hand Varian Medical Systems, Inc. (NYSE:VAR) is the least popular one with only 15 bullish hedge fund positions. Huntington Ingalls Industries Inc (NYSE:HII) 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. In this regard RAD might be a better candidate to consider a long position.
Disclosure: None
