A market correction in the third quarter, spurred by a number of global macroeconomic concerns ended up having a negative impact on the markets and many hedge funds as a result. The stocks of smaller companies were especially hard hit during this time as investors fled to investments seen as being safer. This is evident in the fact that the Russell 2000 ETF underperformed the S&P 500 ETF by 14 percentage points between June 25 and the end of October. We also received indications that hedge funds were trimming their positions amid the market volatility and uncertainty, and given their greater inclination towards smaller cap stocks than other investors, it follows that a stronger sell-off occurred in those stocks. Let’s study the hedge fund sentiment to see how those concerns affected their ownership of Lockheed Martin Corporation (NYSE:LMT) during the quarter.
Lockheed Martin Corporation (NYSE:LMT) was in 39 hedge funds’ portfolios at the end of the third quarter of 2015. LMT investors should pay attention to an increase in activity from the world’s largest hedge funds of late. There were 36 hedge funds in our database with LMT holdings at 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 Accenture Plc (NYSE:ACN), Lowe’s Companies, Inc. (NYSE:LOW), and Costco Wholesale Corporation (NASDAQ:COST) to gather more data points.
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According to most market participants, hedge funds are seen as underperforming, outdated investment vehicles of years past. While there are greater than an 8000 funds with their doors open at the moment, Our experts choose to focus on the upper echelon of this club, approximately 700 funds. These money managers administer the majority of the hedge fund industry’s total asset base, and by tailing their unrivaled picks, Insider Monkey has uncovered several investment strategies that have historically outstripped the broader indices. Insider Monkey’s small-cap hedge fund strategy beat the S&P 500 index by 12 percentage points a year for a decade in their back tests.
Keeping this in mind, we’re going to take a peek at the fresh action surrounding Lockheed Martin Corporation (NYSE:LMT).
What have hedge funds been doing with Lockheed Martin Corporation (NYSE:LMT)?
Heading into Q4, a total of 39 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the biggest position in Lockheed Martin Corporation (NYSE:LMT). AQR Capital Management has a $135.3 million position in the stock, comprising 0.3% of its 13F portfolio. The second largest stake is held by Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $108.8 million position; 0.5% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that hold long positions comprise Phill Gross and Robert Atchinson’s Adage Capital Management, William B. Gray’s Orbis Investment Management and Michael Messner’s Seminole Capital (Investment Mgmt).
As industrywide interest jumped, key hedge funds were breaking ground themselves. Adage Capital Management, managed by Phill Gross and Robert Atchinson, created a position in Lockheed Martin Corporation (NYSE:LMT). Adage Capital Management had $86.4 million invested in the company at the end of the quarter. William B. Gray’s Orbis Investment Management also made a $66.5 million investment in the stock during the quarter. The other funds with brand new LMT positions are Dmitry Balyasny’s Balyasny Asset Management, Christopher A. Winham’s Tide Point Capital, and Robert Vollero and Gentry T. Beach’s Vollero Beach Capital Partners.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Lockheed Martin Corporation (NYSE:LMT) but similarly valued. We will take a look at Accenture Plc (NYSE:ACN), Lowe’s Companies, Inc. (NYSE:LOW), Costco Wholesale Corporation (NASDAQ:COST), and Priceline.com Inc (NASDAQ:PCLN). All of these 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 |
|---|---|---|---|
| ACN | 37 | 1120652 | 0 |
| LOW | 56 | 3349706 | 0 |
| COST | 38 | 1783917 | -6 |
| PCLN | 86 | 7082014 | 15 |
As you can see these stocks had an average of 54 hedge funds with bullish positions and the average amount invested in these stocks was $3334 million. That figure was $1205 million in LMT’s case. Priceline.com Inc (NASDAQ:PCLN) is the most popular stock in this table. On the other hand Accenture Plc (NYSE:ACN) is the least popular one with only 37 bullish hedge fund positions. Even though Lockheed Martin Corporation (NYSE:LMT), with 39 bullish hedge fund positions is not the least popular stock in this group, it has not attracted much attention from investors. This is a slightly negative signal, and we’d rather spend our time researching stocks that hedge funds are collectively the fondest of and, in this regard PCLN might be a better alternative.
