We have been waiting for this for a year and finally the third quarter ended up showing a nice bump in the performance of small-cap stocks. Both the S&P 500 and Russell 2000 were up since the end of the second quarter, but small-cap stocks outperformed the large-cap stocks by double digits. This is important for hedge funds, which are big supporters of small-cap stocks, because their investors started pulling some of their capital out due to poor recent performance. It is very likely that equity hedge funds will deliver better risk adjusted returns in the second half of this year. In this article we are going to look at how this recent market trend affected the sentiment of hedge funds towards Leidos Holdings, Inc. (NYSE:LDOS), and what that likely means for the prospects of the company and its stock.
Is Leidos Holdings, Inc. (NYSE:LDOS) a buy, sell, or hold? The smart money is in an optimistic mood. The number of bullish hedge fund positions inched up by 1 recently. LDOS was in 27 hedge funds’ portfolios at the end of the third quarter of 2016. There were 26 hedge funds in our database with LDOS positions at the end of the previous quarter. At the end of this article we will also compare LDOS to other stocks including ONE Gas Inc (NYSE:OGS), Endo Health Solutions Inc (NASDAQ:ENDP), and First Niagara Financial Group Inc. (NASDAQ:FNFG) to get a better sense of its popularity.
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How have hedgies been trading Leidos Holdings, Inc. (NYSE:LDOS)?
At the end of the third quarter, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 4% from one quarter earlier, and the third-straight quarter in which hedge fund ownership has increased. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Jason Karp’s Tourbillon Capital Partners has the number one position in Leidos Holdings, Inc. (NYSE:LDOS), worth close to $120.1 million, accounting for 2.5% of its total 13F portfolio. Sitting at the No. 2 spot is Southpoint Capital Advisors, led by John Smith Clark, holding a $119.8 million position; the fund has 5.4% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish include Alan Fournier’s Pennant Capital Management, Doug Silverman and Alexander Klabin’s Senator Investment Group, and Jim Simons’ Renaissance Technologies.