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Hedge Funds Are Selling Northrop Grumman Corporation (NOC)

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Northrop Grumman Corporation (NYSE:NOC) was in 21 hedge funds’ portfolio at the end of December. NOC investors should pay attention to a decrease in support from the world’s most elite money managers in recent months. There were 24 hedge funds in our database with NOC positions at the end of the previous quarter. This is crucial to point out, as Northrop was upgraded by JP Morgan earlier this morning, to “neutral” from “underweight.”

Northrop Grumman Corporation (NYSE:NOC)Credit: Northrop Grumman

To the average investor, there are a multitude of methods market participants can use to analyze publicly traded companies. A pair of the most innovative are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the best money managers can outclass the market by a solid amount (see just how much).

Just as key, optimistic insider trading sentiment is a second way to parse down the financial markets. Just as you’d expect, there are plenty of reasons for a corporate insider to drop shares of his or her company, but just one, very simple reason why they would initiate a purchase. Many empirical studies have demonstrated the valuable potential of this method if shareholders know where to look (learn more here).

With all of this in mind, we’re going to take a glance at the latest action regarding Northrop Grumman Corporation (NYSE:NOC).

Hedge fund activity in Northrop Grumman Corporation (NYSE:NOC)

At year’s end, a total of 21 of the hedge funds we track were long in this stock, a change of -13% from the third quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their stakes significantly.

According to our comprehensive database, First Eagle Investment Management, managed by Jean-Marie Eveillard, holds the largest position in Northrop Grumman Corporation (NYSE:NOC). First Eagle Investment Management has a $423.6 million position in the stock, comprising 1.5% of its 13F portfolio. Sitting at the No. 2 spot is Pzena Investment Management, managed by Richard S. Pzena, which held a $260.4 million position; 2.1% of its 13F portfolio is allocated to the stock. Some other hedgies with similar optimism include Cliff Asness’s AQR Capital Management, and David Harding’s Winton Capital Management.

Judging by the fact that Northrop Grumman Corporation (NYSE:NOC) has faced bearish sentiment from the smart money, logic holds that there was a specific group of funds who were dropping their entire stakes in Q4. It’s worth mentioning that Phill Gross and Robert Atchinson’s Adage Capital Management said goodbye to the biggest investment of the 450+ funds we watch, comprising an estimated $10.9 million in stock., and David Dreman of Dreman Value Management was right behind this move, as the fund dropped about $1 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 3 funds in Q4.

What have insiders been doing with Northrop Grumman Corporation (NYSE:NOC)?

Insider buying is most useful when the primary stock in question has seen transactions within the past half-year. Over the last half-year time period, Northrop Grumman Corporation (NYSE:NOC) has experienced 1 unique insiders buying, and 5 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Northrop Grumman Corporation (NYSE:NOC). These stocks are Gencorp Inc (NYSE:GY), AerCap Holdings N.V. (NYSE:AER), Textron Inc. (NYSE:TXT), , and Raytheon Company (NYSE:RTN). This group of stocks are the members of the aerospace/defense – major diversified industry and their market caps are closest to NOC’s market cap.

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