A Look at Hedge Funds’ Favorite Defense Stocks Amid U.S. Decision to Lift Arms Ban on Vietnam

#2. Raytheon Company (NYSE:RTN)

– Investors with long position as of March 31: 42

– Aggregate value of investors’ holdings as of March 31: $1.45 Billion

There were 42 hedge funds stalked by Insider Monkey with equity investments in Raytheon Company (NYSE:RTN) at the end of the March quarter, up from 35 recorded at the end of the December quarter. The value of those equity investments rose to a massive $1.45 billion from $1.08 billion during the three-month period and represented 4% of Raytheon’s outstanding shares. Raytheon Company develops technologically advanced and integrated products, services and solutions in markets such as sensing, command, communications, cyber and intelligence, mission support, among others. Earlier this month, Jordan’s Ministry of Defense inked an agreement with the U.S. Department of Defense to acquire tube-launched, wireless-guided missiles produced by Raytheon, with deliveries commencing this year. The company’s total net sales for the first quarter of 2016 that ended April 3 increased $475 million to $5.76 billion due to higher external net sales at the Missile Systems business segment and higher sales from the new cybersecurity joint venture company called Forcepoint. Raytheon has seen its market value gain 3% since the start of 2016. Israel Englander’s Millennium Management held 1.41 million shares of Raytheon Company (NYSE:RTN) at the end of March.

#1. Northrop Grumman Corporation (NYSE:NOC)

– Investors with long position as of March 31: 42

– Aggregate value of investors’ holdings as of March 31: $2.35 Billion

Northrop Grumman Corporation (NYSE:NOC) received some love from the hedge fund industry during the first quarter of the year, as the number of funds invested in the $38 billion-company increased to 42 from 40 quarter-on-quarter. Similarly, the aggregate value of hedge funds’ equity investments in the company rose to $2.35 billion from $2.26 billion. As in the case of Lockheed Martin, global security company Northrop Grumman was downgraded to ‘Sector Perform’ from ‘Outperform’ by analysts at RBC Capital Markets due to the strong performance of the stock and higher valuation multiple. In the second half of 2015, the U.S. Air Force announced that Northrop Grumman would build the B-21 Long-Range Strike Bomber, an $800 million high-tech stealth bomber. The Long-Range Strike Bomber program, which is said to be classified, has entered into the Engineering and Manufacturing Development phase. Meanwhile, RBC believes the B-21 program will be margin dilutive for the company in the short-term future. Shares of Northrop Grumman have gained 12% year-to-date. Lee Ainslie’s Maverick Capital acquired a new stake of nearly 659,000 shares of Northrop Grumman Corporation (NYSE:NOC) during the first quarter.

Disclosure: None