Is Huntington Ingalls Industries Inc (NYSE:HII) worth your attention right now? Investors who are in the know are in a bullish mood. The number of long hedge fund positions improved by 2 recently.
If you'd ask most market participants, hedge funds are assumed to be worthless, outdated investment tools of the past. While there are greater than 8000 funds trading at the moment, we at Insider Monkey look at the top tier of this club, around 450 funds. It is widely believed that this group oversees the lion's share of all hedge funds' total asset base, and by monitoring their highest performing stock picks, we have discovered a number of investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we've started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 25 percentage points in 6.5 month (check out a sample of our picks).
Equally as beneficial, optimistic insider trading activity is another way to parse down the financial markets. Obviously, there are a number of reasons for a bullish insider to get rid of shares of his or her company, but just one, very simple reason why they would behave bullishly. Various academic studies have demonstrated the useful potential of this tactic if shareholders understand where to look (learn more here).
Keeping this in mind, let's take a peek at the recent action regarding Huntington Ingalls Industries Inc (NYSE:HII).
At year's end, a total of 21 of the hedge funds we track were long in this stock, a change of 11% from the previous quarter. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their holdings meaningfully.
According to our comprehensive database, Pennant Capital Management, managed by Alan Fournier, holds the largest position in Huntington Ingalls Industries Inc (NYSE:HII). Pennant Capital Management has a $191 million position in the stock, comprising 4% of its 13F portfolio. On Pennant Capital Management's heels is Eric Mindich of Eton Park Capital, with a $78 million position; 5.8% of its 13F portfolio is allocated to the stock. Other peers that hold long positions include Ryan Heslop and Ariel Warszawski's Firefly Value Partners, D. E. Shaw's D E Shaw and Richard S. Pzena's Pzena Investment Management.
As aggregate interest increased, key hedge funds have been driving this bullishness. Firefly Value Partners, managed by Ryan Heslop and Ariel Warszawski, assembled the biggest position in Huntington Ingalls Industries Inc (NYSE:HII). Firefly Value Partners had 39 million invested in the company at the end of the quarter. Jim Chanos's Kynikos also made a $8 million investment in the stock during the quarter. The other funds with brand new HII positions are Glenn Russell Dubin's Highbridge Capital Management, Ken Gray and Steve Walsh's Bryn Mawr Capital, and Israel Englander's Millennium Management.
Insider purchases made by high-level executives is at its handiest when the primary stock in question has experienced transactions within the past 180 days. Over the last half-year time frame, Huntington Ingalls Industries Inc (NYSE:HII) has seen zero unique insiders purchasing, and 3 insider sales (see the details of insider trades here).
With the results exhibited by the aforementioned studies, retail investors must always keep an eye on hedge fund and insider trading activity, and Huntington Ingalls Industries Inc (NYSE:HII) applies perfectly to this mantra.
Insider Monkey's small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.