LRT Capital Management, an investment management firm, released its October 2022 investor letter. A copy of the same can be downloaded here. The results in October were excellent, and its LRT Economic Moat strategy returned 7.38%. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.
LRT Capital discussed stocks like Northrop Grumman Corporation (NYSE:NOC) in the investor letter. Headquartered in Falls Church, Virginia, Northrop Grumman Corporation (NYSE:NOC) is a global aerospace and defense company. On November 16, 2022, Northrop Grumman Corporation (NYSE:NOC) stock closed at $505.13 per share. One-month return of Northrop Grumman Corporation (NYSE:NOC) was -1.43% and its shares gained 43.74% of their value over the last 52 weeks. Northrop Grumman Corporation (NYSE:NOC) has a market capitalization of $77.746 billion.
LRT Capital made the following comment about Northrop Grumman Corporation (NYSE:NOC) in its October investor letter:
“Based in Virginia, Northrop Grumman Corporation (NYSE:NOC) is one of the world’s largest defense contractors with annual revenue more than $30 billion. The company operates in a cozy oligopoly, that after decades of consolidation the US defense market is now controlled by five large companies: The Boeing Company (BA), General Dynamics Corporation (GD), Lockheed Martin Corporation (LMT), Northrop Grumman Corporation (NOC), and Raytheon Technologies Corporation (RTX).
Industry barriers to entry are immense, government procurement cycles are extremely long, and the consolidated industry structure reflects this. This industry structure has allowed Northrop to earn stable mid-teens returns on invested capital (ROIC) and grow earnings per share at a rate of over 13% per year in the past decade, despite a topline that has grown only in-line with inflation. Even after the recent run-up in the stock price, it trades at approximate 15x, next year’s earnings estimates, far below the S&P 500 index, despite being an above average company. While nominally, there are five major defense contractors, the true industry concentration is even higher because not all companies compete in all possible business segments. General Dynamics’ division submarine division, Electric Boat, is the sole supplier of nuclear power submarines in the United States. Lockheed Martin is the sole supplier of the F-35 and F-22. Northrop was the sole bidder on the contract to develop the next generation of intercontinental ballistic missiles; and so on…” (Click here to read the full text)
Northrop Grumman Corporation (NYSE:NOC) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 46 hedge fund portfolios held Northrop Grumman Corporation (NYSE:NOC) at the end of the third quarter which was 45 in the previous quarter.
We discussed Northrop Grumman Corporation (NYSE:NOC) in another article and shared the biggest defense equipment companies in the world. In addition, please check out our hedge fund investor letters Q3 2022 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
