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 887 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their December 31st holdings, data that is available nowhere else. Should you consider Lockheed Martin Corporation (NYSE:LMT) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Lockheed Martin Corporation (NYSE:LMT) shareholders have witnessed an increase in enthusiasm from smart money of late. Lockheed Martin Corporation (NYSE:LMT) was in 53 hedge funds’ portfolios at the end of December. The all time high for this statistic is 55. There were 47 hedge funds in our database with LMT holdings at the end of September. Our calculations also showed that LMT isn’t among the 30 most popular stocks among hedge funds (click for Q4 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 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Peter Rathjens of Arrowstreet Capital
At Insider Monkey we leave no stone unturned when looking for 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 hydrogen fuel cell 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. Keeping this in mind we’re going to take a look at the latest hedge fund action regarding Lockheed Martin Corporation (NYSE:LMT).
Do Hedge Funds Think LMT Is A Good Stock To Buy Now?
At the end of December, a total of 53 of the hedge funds tracked by Insider Monkey were long this stock, a change of 13% from the third quarter of 2020. The graph below displays the number of hedge funds with bullish position in LMT over the last 22 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Lockheed Martin Corporation (NYSE:LMT) was held by Arrowstreet Capital, which reported holding $544.7 million worth of stock at the end of December. It was followed by D E Shaw with a $406.2 million position. Other investors bullish on the company included GQG Partners, Millennium Management, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Heard Capital allocated the biggest weight to Lockheed Martin Corporation (NYSE:LMT), around 7.47% of its 13F portfolio. Adam Capital is also relatively very bullish on the stock, setting aside 3 percent of its 13F equity portfolio to LMT.
As industrywide interest jumped, key hedge funds have been driving this bullishness. Laurion Capital Management, managed by Benjamin A. Smith, created the most outsized position in Lockheed Martin Corporation (NYSE:LMT). Laurion Capital Management had $14.2 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also initiated a $5.2 million position during the quarter. The other funds with new positions in the stock are Michael Kharitonov and Jon David McAuliffe’s Voleon Capital, Matthew Tewksbury’s Stevens Capital Management, and Alec Litowitz and Ross Laser’s Magnetar Capital.
Let’s also examine hedge fund activity in other stocks similar to Lockheed Martin Corporation (NYSE:LMT). We will take a look at Caterpillar Inc. (NYSE:CAT), Square, Inc. (NYSE:SQ), American Express Company (NYSE:AXP), Zoom Video Communications, Inc. (NASDAQ:ZM), The Estee Lauder Companies Inc (NYSE:EL), Intuitive Surgical, Inc. (NASDAQ:ISRG), and General Electric Company (NYSE:GE). This group of stocks’ market caps resemble LMT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CAT | 53 | 4157844 | 12 |
| SQ | 89 | 8819199 | 16 |
| AXP | 60 | 21887073 | 12 |
| ZM | 59 | 6002261 | 3 |
| EL | 51 | 3593398 | 5 |
| ISRG | 49 | 1802145 | -1 |
| GE | 69 | 5684620 | 24 |
| Average | 61.4 | 7420934 | 10.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 61.4 hedge funds with bullish positions and the average amount invested in these stocks was $7421 million. That figure was $2528 million in LMT’s case. Square, Inc. (NYSE:SQ) is the most popular stock in this table. On the other hand Intuitive Surgical, Inc. (NASDAQ:ISRG) is the least popular one with only 49 bullish hedge fund positions. Lockheed Martin Corporation (NYSE:LMT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for LMT is 43.9. 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 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and surpassed the market again by 1.6 percentage points. Unfortunately LMT wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); LMT investors were disappointed as the stock returned 8% since the end of December (through 4/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
