Should You Be Worried About Northrop Grumman Corporation (NOC)’s Falling Hedge Fund Ownership?

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Because Northrop Grumman Corporation (NYSE:NOC) has faced a decline in interest from the aggregate hedge fund industry, logic holds that there was a specific group of money managers who sold off their full holdings by the end of the third quarter. Interestingly, Stephen Mandel’s Lone Pine Capital cut the largest stake of the 700 funds followed by Insider Monkey, totaling an estimated $588.4 million in stock, while First Eagle Investment Management was right behind this move, as the fund cut about $448.9 million worth of shares. These moves are interesting, as aggregate hedge fund interest fell by 7 funds by the end of the third quarter.

Let’s also examine hedge fund activity in other stocks similar to Northrop Grumman Corporation (NYSE:NOC). We will take a look at ING Groep N.V. (ADR) (NYSE:ING), Enbridge Inc (USA) (NYSE:ENB), Netflix, Inc. (NASDAQ:NFLX), and Sumitomo Mitsui Financial Grp, Inc. (ADR) (NYSE:SMFG). This group of stocks’ market values are similar to NOC’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ING 12 58872 -2
ENB 21 286488 6
NFLX 55 3711921 1
SMFG 10 26743 0

As you can see these stocks had an average of 24.5 hedge funds with bullish positions and the average amount invested in these stocks was $1.02 billion. That figure was $1.23 billion in NOC’s case. Netflix, Inc. (NASDAQ:NFLX) is the most popular stock in this table. On the other hand Sumitomo Mitsui Financial Grp, Inc. (ADR) (NYSE:SMFG) is the least popular one with only 10 bullish hedge fund positions. Northrop Grumman Corporation (NYSE:NOC) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard NFLX might be a better candidate to consider a long position in.

Disclosure: None

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