Do Hedge Funds and Insiders Love General Dynamics Corporation (GD)?

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General Dynamics Corporation (NYSE:GD) was in 48 hedge funds’ portfolio at the end of the first quarter of 2013. GD has seen an increase in support from the world’s most elite money managers lately. There were 39 hedge funds in our database with GD holdings at the end of the previous quarter.

To most market participants, hedge funds are viewed as slow, outdated investment vehicles of years past. While there are more than 8000 funds with their doors open at present, we look at the bigwigs of this club, around 450 funds. Most estimates calculate that this group has its hands on most of the smart money’s total asset base, and by monitoring their best investments, we have formulated a few investment strategies that have historically outpaced the S&P 500 index. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points a year 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 outpaced the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

General Dynamics Corporation (NYSE:GD)Just as key, bullish insider trading sentiment is another way to break down the financial markets. Obviously, there are lots of incentives for an insider to sell shares of his or her company, but only one, very obvious reason why they would buy. Plenty of academic studies have demonstrated the market-beating potential of this strategy if piggybackers know where to look (learn more here).

With all of this in mind, let’s take a peek at the key action surrounding General Dynamics Corporation (NYSE:GD).

What have hedge funds been doing with General Dynamics Corporation (NYSE:GD)?

In preparation for this quarter, a total of 48 of the hedge funds we track were long in this stock, a change of 23% from the first quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings substantially.

Of the funds we track, Longview Asset Management, managed by James A. Star, holds the largest position in General Dynamics Corporation (NYSE:GD). Longview Asset Management has a $2.355 billion position in the stock, comprising 79.2% of its 13F portfolio. The second largest stake is held by Jonathon Jacobson of Highfields Capital Management, with a $133.1 million call position; the fund has 1.2% of its 13F portfolio invested in the stock. Some other hedge funds that are bullish include D. E. Shaw’s D E Shaw, Bob Peck and Andy Raab’s FPR Partners and Ken Griffin’s Citadel Investment Group.

As industrywide interest jumped, specific money managers have been driving this bullishness. Highfields Capital Management, managed by Jonathon Jacobson, established the biggest call position in General Dynamics Corporation (NYSE:GD). Highfields Capital Management had 133.1 million invested in the company at the end of the quarter. Bob Peck and Andy Raab’s FPR Partners also made a $54.3 million investment in the stock during the quarter. The following funds were also among the new GD investors: Israel Englander’s Millennium Management, Jim Simons’s Renaissance Technologies, and James Melcher’s Balestra.

What do corporate executives and insiders think about General Dynamics Corporation (NYSE:GD)?

Insider trading activity, especially when it’s bullish, is particularly usable when the company in question has experienced transactions within the past 180 days. Over the last six-month time frame, General Dynamics Corporation (NYSE:GD) has experienced 1 unique insiders buying, and 11 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to General Dynamics Corporation (NYSE:GD). These stocks are L-3 Communications Holdings, Inc. (NYSE:LLL), TransDigm Group Incorporated (NYSE:TDG), Rockwell Collins, Inc. (NYSE:COL), The Boeing Company (NYSE:BA), and Lockheed Martin Corporation (NYSE:LMT). This group of stocks belong to the aerospace/defense products & services industry and their market caps are similar to GD’s market cap.

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