The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 873 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their June 30th holdings, data that is available nowhere else. Should you consider Leidos Holdings Inc (NYSE:LDOS) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Is Leidos Holdings Inc (NYSE:LDOS) the right pick for your portfolio? The smart money was becoming hopeful. The number of long hedge fund bets advanced by 4 lately. Leidos Holdings Inc (NYSE:LDOS) was in 22 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 35. Our calculations also showed that LDOS isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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 monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Paul Marshall of Marshall Wace
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let’s check out the key hedge fund action regarding Leidos Holdings Inc (NYSE:LDOS).
Do Hedge Funds Think LDOS Is A Good Stock To Buy Now?
At Q2’s end, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 22% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards LDOS over the last 24 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
More specifically, Citadel Investment Group was the largest shareholder of Leidos Holdings Inc (NYSE:LDOS), with a stake worth $43.9 million reported as of the end of June. Trailing Citadel Investment Group was Balyasny Asset Management, which amassed a stake valued at $37.1 million. Millennium Management, Prospector Partners, and Soapstone Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Soapstone Capital allocated the biggest weight to Leidos Holdings Inc (NYSE:LDOS), around 4.06% of its 13F portfolio. Prospector Partners is also relatively very bullish on the stock, dishing out 1.33 percent of its 13F equity portfolio to LDOS.
With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. Adage Capital Management, managed by Phill Gross and Robert Atchinson, created the most outsized position in Leidos Holdings Inc (NYSE:LDOS). Adage Capital Management had $7.9 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also made a $6.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace’s Marshall Wace LLP, Thomas Lee’s Lee Capital Management, and Joel Greenblatt’s Gotham Asset Management.
Let’s check out hedge fund activity in other stocks similar to Leidos Holdings Inc (NYSE:LDOS). We will take a look at RH (NYSE:RH), CenterPoint Energy, Inc. (NYSE:CNP), Signature Bank (NASDAQ:SBNY), WestRock Company (NYSE:WRK), GoodRx Holdings, Inc. (NASDAQ:GDRX), Wynn Resorts, Limited (NASDAQ:WYNN), and ABIOMED, Inc. (NASDAQ:ABMD). This group of stocks’ market valuations resemble LDOS’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RH | 54 | 4331314 | 4 |
| CNP | 20 | 287723 | -5 |
| SBNY | 43 | 787102 | 3 |
| WRK | 32 | 572106 | 5 |
| GDRX | 28 | 635923 | 4 |
| WYNN | 37 | 712498 | -12 |
| ABMD | 24 | 899188 | -2 |
| Average | 34 | 1175122 | -0.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 34 hedge funds with bullish positions and the average amount invested in these stocks was $1175 million. That figure was $171 million in LDOS’s case. RH (NYSE:RH) is the most popular stock in this table. On the other hand CenterPoint Energy, Inc. (NYSE:CNP) is the least popular one with only 20 bullish hedge fund positions. Leidos Holdings Inc (NYSE:LDOS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for LDOS is 30.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and surpassed the market again by 1.6 percentage points. Unfortunately LDOS wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); LDOS investors were disappointed as the stock returned 1.3% since the end of June (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
Follow Leidos Holdings Inc. (NYSE:LDOS)
Follow Leidos Holdings Inc. (NYSE:LDOS)
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Disclosure: None. This article was originally published at Insider Monkey.
