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Hedge Funds Are Betting On L-3 Technologies, Inc. (LLL)

Insider Monkey finished processing more than 738 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2019. What do these smart investors think about L-3 Technologies, Inc. (NYSE:LLL)?

L-3 Technologies, Inc. (NYSE:LLL) was in 28 hedge funds’ portfolios at the end of March. LLL shareholders have witnessed an increase in support from the world’s most elite money managers lately. There were 22 hedge funds in our database with LLL positions at the end of the previous quarter. Our calculations also showed that LLL isn’t among the 30 most popular stocks among hedge funds.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Thomas Sandell

Let’s review the recent hedge fund action surrounding L-3 Technologies, Inc. (NYSE:LLL).

What have hedge funds been doing with L-3 Technologies, Inc. (NYSE:LLL)?

At Q1’s end, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 27% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in LLL over the last 15 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

LLL_june2019

Among these funds, Citadel Investment Group held the most valuable stake in L-3 Technologies, Inc. (NYSE:LLL), which was worth $262.5 million at the end of the first quarter. On the second spot was Carlson Capital which amassed $169.4 million worth of shares. Moreover, Alpine Associates, Holocene Advisors, and Alyeska Investment Group were also bullish on L-3 Technologies, Inc. (NYSE:LLL), allocating a large percentage of their portfolios to this stock.

As industrywide interest jumped, key hedge funds have been driving this bullishness. Carlson Capital, managed by Clint Carlson, established the most outsized position in L-3 Technologies, Inc. (NYSE:LLL). Carlson Capital had $169.4 million invested in the company at the end of the quarter. Tom Sandell’s Sandell Asset Management also initiated a $38.2 million position during the quarter. The other funds with brand new LLL positions are John Bader’s Halcyon Asset Management, John Thiessen’s Vertex One Asset Management, and Matthew Tewksbury’s Stevens Capital Management.

Let’s also examine hedge fund activity in other stocks similar to L-3 Technologies, Inc. (NYSE:LLL). We will take a look at Garmin Ltd. (NASDAQ:GRMN), Genuine Parts Company (NYSE:GPC), Omnicom Group Inc. (NYSE:OMC), and Alexandria Real Estate Equities Inc (NYSE:ARE). This group of stocks’ market valuations match LLL’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GRMN 27 512815 -4
GPC 22 326495 -7
OMC 20 661219 2
ARE 17 207362 -5
Average 21.5 426973 -3.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.5 hedge funds with bullish positions and the average amount invested in these stocks was $427 million. That figure was $1233 million in LLL’s case. Garmin Ltd. (NASDAQ:GRMN) is the most popular stock in this table. On the other hand Alexandria Real Estate Equities Inc (NYSE:ARE) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks L-3 Technologies, Inc. (NYSE:LLL) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on LLL as the stock returned 17.5% during the same period and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

Disclosure: None. This article was originally published at Insider Monkey.

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