Stocks, especially the once high flying technology stocks, had a lousy start to the new year. QQQ lost 9% of its value in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards Lockheed Martin Corporation (NYSE:LMT) at the end of the third quarter and determine whether the smart money was really smart about this stock.
Lockheed Martin Corporation (NYSE:LMT) was in 51 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 58. LMT has seen a decrease in hedge fund sentiment recently. There were 58 hedge funds in our database with LMT positions at the end of the second quarter. Our calculations also showed that LMT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Donald Yacktman of Yacktman Asset Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we’re going to take a glance at the key hedge fund action regarding Lockheed Martin Corporation (NYSE:LMT).
Do Hedge Funds Think LMT Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 51 of the hedge funds tracked by Insider Monkey were long this stock, a change of -12% from the second quarter of 2021. On the other hand, there were a total of 47 hedge funds with a bullish position in LMT a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
Among these funds, Citadel Investment Group held the most valuable stake in Lockheed Martin Corporation (NYSE:LMT), which was worth $466.9 million at the end of the third quarter. On the second spot was Millennium Management which amassed $193.8 million worth of shares. Yacktman Asset Management, ARK Investment Management, and D E Shaw were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Scion Asset Management allocated the biggest weight to Lockheed Martin Corporation (NYSE:LMT), around 24.82% of its 13F portfolio. Heard Capital is also relatively very bullish on the stock, setting aside 7.03 percent of its 13F equity portfolio to LMT.
Due to the fact that Lockheed Martin Corporation (NYSE:LMT) has faced declining sentiment from hedge fund managers, it’s safe to say that there is a sect of hedge funds who sold off their positions entirely by the end of the third quarter. Interestingly, Paul Tudor Jones’s Tudor Investment Corp dropped the biggest investment of all the hedgies tracked by Insider Monkey, comprising close to $10.1 million in stock, and Alexander Mitchell’s Scopus Asset Management was right behind this move, as the fund dumped about $6.8 million worth. These moves are important to note, as total hedge fund interest fell by 7 funds by the end of the third quarter.
Let’s check out hedge fund activity in other stocks similar to Lockheed Martin Corporation (NYSE:LMT). These stocks are Infosys Limited (NYSE:INFY), Prologis Inc (NYSE:PLD), Zoetis Inc (NYSE:ZTS), BP plc (NYSE:BP), Snowflake Inc (NYSE:SNOW), Anthem Inc (NYSE:ANTM), and ConocoPhillips (NYSE:COP). All of these stocks’ market caps match LMT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| INFY | 29 | 2473668 | 7 |
| PLD | 32 | 483464 | -8 |
| ZTS | 58 | 2713394 | 0 |
| BP | 29 | 1053236 | -1 |
| SNOW | 73 | 14569929 | 3 |
| ANTM | 59 | 4585560 | -8 |
| COP | 49 | 1371142 | -1 |
| Average | 47 | 3892913 | -1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 47 hedge funds with bullish positions and the average amount invested in these stocks was $3893 million. That figure was $1284 million in LMT’s case. Snowflake Inc (NYSE:SNOW) is the most popular stock in this table. On the other hand Infosys Limited (NYSE:INFY) is the least popular one with only 29 bullish hedge fund positions. Lockheed Martin Corporation (NYSE:LMT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for LMT is 49.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still beat the market by 3.6 percentage points. Hedge funds were also right about betting on LMT as the stock returned 13.7% since the end of Q3 (through 1/31) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Lockheed Martin Corp (NYSE:LMT)
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Disclosure: None. This article was originally published at Insider Monkey.
