Is Lockheed Martin Corporation (NYSE:LMT) undervalued? Money managers are becoming less hopeful. The number of long hedge fund positions were trimmed by 4 recently.
In the financial world, there are dozens of methods shareholders can use to track the equity markets. Two of the most under-the-radar are hedge fund and insider trading activity. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the best money managers can beat the broader indices by a very impressive amount (see just how much).
Just as integral, optimistic insider trading activity is another way to break down the stock market universe. Obviously, there are a variety of reasons for an upper level exec to get rid of shares of his or her company, but only one, very clear reason why they would buy. Plenty of academic studies have demonstrated the market-beating potential of this method if shareholders know where to look (learn more here).
With these “truths” under our belt, let’s take a glance at the recent action encompassing Lockheed Martin Corporation (NYSE:LMT).
How have hedgies been trading Lockheed Martin Corporation (NYSE:LMT)?
At the end of the first quarter, a total of 32 of the hedge funds we track were long in this stock, a change of -11% from the previous quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their stakes considerably.
Of the funds we track, First Eagle Investment Management, managed by Jean-Marie Eveillard, holds the biggest position in Lockheed Martin Corporation (NYSE:LMT). First Eagle Investment Management has a $383.6 million position in the stock, comprising 1.3% of its 13F portfolio. On First Eagle Investment Management’s heels is Ken Griffin of Citadel Investment Group, with a $221.9 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Remaining hedge funds that are bullish include Michael A. Price and Amos Meron’s Empyrean Capital Partners, Ron Gutfleish’s Elm Ridge Capital and David Harding’s Winton Capital Management.
Due to the fact that Lockheed Martin Corporation (NYSE:LMT) has witnessed a declination in interest from the aggregate hedge fund industry, it’s easy to see that there exists a select few fund managers that slashed their entire stakes at the end of the first quarter. At the top of the heap, John Shapiro’s Chieftain Capital dumped the largest position of the “upper crust” of funds we key on, totaling about $43.6 million in stock., and Matthew Tewksbury of Stevens Capital Management was right behind this move, as the fund dropped about $10 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 4 funds at the end of the first quarter.
What do corporate executives and insiders think about Lockheed Martin Corporation (NYSE:LMT)?
Insider purchases made by high-level executives is best served when the company in focus has seen transactions within the past six months. Over the last six-month time frame, Lockheed Martin Corporation (NYSE:LMT) has experienced zero unique insiders purchasing, and 6 insider sales (see the details of insider trades here).
Let’s also take a look at hedge fund and insider activity in other stocks similar to Lockheed Martin Corporation (NYSE:LMT). These stocks are TransDigm Group Incorporated (NYSE:TDG), Rockwell Collins, Inc. (NYSE:COL), United Technologies Corporation (NYSE:UTX), The Boeing Company (NYSE:BA), and General Dynamics Corporation (NYSE:GD). All of these stocks are in the aerospace/defense products & services industry and their market caps are closest to LMT’s market cap.