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Raytheon Company (RTN): Hedge Funds and Insiders Are Bearish, What Should You Do?

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Raytheon Company (NYSE:RTN) was in 24 hedge funds’ portfolio at the end of the first quarter of 2013. RTN investors should be aware of a decrease in hedge fund sentiment in recent months. There were 25 hedge funds in our database with RTN positions at the end of the previous quarter.

According to most shareholders, hedge funds are viewed as underperforming, old financial tools of yesteryear. While there are greater than 8000 funds with their doors open today, we at Insider Monkey choose to focus on the elite of this club, close to 450 funds. It is widely believed that this group oversees the lion’s share of the hedge fund industry’s total capital, and by tracking their best stock picks, we have found a few investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Raytheon Company (NYSE:RTN)Equally as integral, positive insider trading activity is another way to parse down the marketplace. As the old adage goes: there are plenty of stimuli for a corporate 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 impressive potential of this strategy if piggybackers know where to look (learn more here).

Consequently, it’s important to take a glance at the recent action encompassing Raytheon Company (NYSE:RTN).

How have hedgies been trading Raytheon Company (NYSE:RTN)?

At the end of the first quarter, a total of 24 of the hedge funds we track were long in this stock, a change of -4% from one quarter earlier. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were increasing their stakes substantially.

When looking at the hedgies we track, Adage Capital Management, managed by Phill Gross and Robert Atchinson, holds the biggest position in Raytheon Company (NYSE:RTN). Adage Capital Management has a $238.2 million position in the stock, comprising 0.8% of its 13F portfolio. Sitting at the No. 2 spot is Cliff Asness of AQR Capital Management, with a $75.5 million position; 0.3% of its 13F portfolio is allocated to the company. Other peers that are bullish include David Harding’s Winton Capital Management, James Melcher’s Balestra and Joel Greenblatt’s Gotham Asset Management.

Due to the fact that Raytheon Company (NYSE:RTN) has witnessed a declination in interest from the entirety of the hedge funds we track, logic holds that there lies a certain “tier” of fund managers that decided to sell off their entire stakes at the end of the first quarter. Interestingly, Matthew Hulsizer’s PEAK6 Capital Management dropped the largest investment of all the hedgies we watch, comprising about $3.9 million in call options. Murray Stahl’s fund, Horizon Asset Management, also cut its stock, about $0.6 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 1 funds at the end of the first quarter.

What do corporate executives and insiders think about Raytheon Company (NYSE:RTN)?

Insider buying is most useful when the company in question has experienced transactions within the past half-year. Over the last 180-day time period, Raytheon Company (NYSE:RTN) has seen zero unique insiders buying, and 11 insider sales (see the details of insider trades here).

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

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