Lockheed Martin Corporation (LMT) Fell Out Of Favor With Hedge Funds
After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of March 31st. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Lockheed Martin Corporation (NYSE:LMT).
Is Lockheed Martin Corporation (NYSE:LMT) going to take off soon? Hedge funds were getting less bullish. The number of bullish hedge fund bets went down by 3 lately. Lockheed Martin Corporation (NYSE:LMT) was in 50 hedge funds' portfolios at the end of March. The all time high for this statistic is 55. Our calculations also showed that LMT isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Cathie Wood of ARK Investment Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. 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. With all of this in mind let's take a gander at the new hedge fund action surrounding Lockheed Martin Corporation (NYSE:LMT).
Do Hedge Funds Think LMT Is A Good Stock To Buy Now?
At Q1's end, a total of 50 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -6% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards LMT over the last 23 quarters. With the smart money's sentiment swirling, there exists a few key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the most valuable position in Lockheed Martin Corporation (NYSE:LMT). Arrowstreet Capital has a $590.8 million position in the stock, comprising 0.8% of its 13F portfolio. Sitting at the No. 2 spot is D E Shaw, led by D. E. Shaw, holding a $354.5 million position; 0.3% of its 13F portfolio is allocated to the company. Other members of the smart money with similar optimism include John Overdeck and David Siegel's Two Sigma Advisors, Renaissance Technologies. In terms of the portfolio weights assigned to each position Heard Capital allocated the biggest weight to Lockheed Martin Corporation (NYSE:LMT), around 7.08% of its 13F portfolio. Hi-Line Capital Management is also relatively very bullish on the stock, dishing out 4.68 percent of its 13F equity portfolio to LMT.
Since Lockheed Martin Corporation (NYSE:LMT) has witnessed a decline in interest from the smart money, we can see that there exists a select few fund managers who were dropping their full holdings by the end of the first quarter. It's worth mentioning that Marcio Appel's Adam Capital sold off the largest position of all the hedgies monitored by Insider Monkey, comprising an estimated $27.8 million in stock, and Chen Tianqiao's Shanda Asset Management was right behind this move, as the fund dumped about $10.6 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 3 funds by the end of the first quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Lockheed Martin Corporation (NYSE:LMT) but similarly valued. These stocks are Square, Inc. (NYSE:SQ), Uber Technologies, Inc. (NYSE:UBER), Target Corporation (NYSE:TGT), Micron Technology, Inc. (NASDAQ:MU), CVS Health Corporation (NYSE:CVS), ServiceNow Inc (NYSE:NOW), and Diageo plc (NYSE:DEO). All of these stocks' market caps are similar to LMT's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SQ,92,9202246,3 UBER,130,10532866,-5 TGT,60,4760942,-18 MU,100,7621579,0 CVS,62,1315655,6 NOW,98,6127672,2 DEO,22,724467,-1 Average,80.6,5755061,-1.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 80.6 hedge funds with bullish positions and the average amount invested in these stocks was $5755 million. That figure was $2295 million in LMT's case. Uber Technologies, Inc. (NYSE:UBER) is the most popular stock in this table. On the other hand Diageo plc (NYSE:DEO) is the least popular one with only 22 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 42.2. 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 17.4% in 2021 through June 18th and surpassed the market again by 6.1 percentage points. Unfortunately LMT wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); LMT investors were disappointed as the stock returned 3.3% since the end of March (through 6/18) 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.
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Disclosure: None. This article was originally published at Insider Monkey.
