Hedge Funds Are Dumping L3Harris Technologies, Inc. (LHX)

In this article we will take a look at whether hedge funds think L3Harris Technologies, Inc. (NYSE:LHX) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

L3Harris Technologies, Inc. (NYSE:LHX) has experienced a decrease in activity from the world’s largest hedge funds of late. L3Harris Technologies, Inc. (NYSE:LHX) was in 29 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 51. There were 42 hedge funds in our database with LHX positions at the end of the second quarter. Our calculations also showed that LHX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

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. With all of this in mind we’re going to take a look at the latest hedge fund action regarding L3Harris Technologies, Inc. (NYSE:LHX).

Do Hedge Funds Think LHX Is A Good Stock To Buy Now?

At Q3’s end, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -31% from the previous quarter. The graph below displays the number of hedge funds with bullish position in LHX over the last 25 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.

More specifically, Yacktman Asset Management was the largest shareholder of L3Harris Technologies, Inc. (NYSE:LHX), with a stake worth $151.6 million reported as of the end of September. Trailing Yacktman Asset Management was Citadel Investment Group, which amassed a stake valued at $74.1 million. Iridian Asset Management, Adam Capital, and ARK Investment Management 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 Adam Capital allocated the biggest weight to L3Harris Technologies, Inc. (NYSE:LHX), around 3.69% of its 13F portfolio. Sandbar Asset Management is also relatively very bullish on the stock, earmarking 2.77 percent of its 13F equity portfolio to LHX.

Seeing as L3Harris Technologies, Inc. (NYSE:LHX) has experienced bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of funds who were dropping their entire stakes last quarter. Intriguingly, Matthew Stadelman’s Diamond Hill Capital said goodbye to the largest position of the 750 funds watched by Insider Monkey, valued at close to $267.2 million in stock, and Jeffrey Talpins’s Element Capital Management was right behind this move, as the fund sold off about $70.4 million worth. These moves are interesting, as total hedge fund interest dropped by 13 funds last quarter.

Let’s check out hedge fund activity in other stocks similar to L3Harris Technologies, Inc. (NYSE:LHX). We will take a look at Veeva Systems Inc (NYSE:VEEV), Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA), Datadog, Inc. (NASDAQ:DDOG), Amphenol Corporation (NYSE:APH), Lloyds Banking Group PLC (NYSE:LYG), Barclays PLC (NYSE:BCS), and Match Group, Inc. (NASDAQ:MTCH). All of these stocks’ market caps are similar to LHX’s market cap.

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As you can see these stocks had an average of 31.1 hedge funds with bullish positions and the average amount invested in these stocks was $1508 million. That figure was $492 million in LHX’s case. Datadog, Inc. (NASDAQ:DDOG) is the most popular stock in this table. On the other hand Lloyds Banking Group PLC (NYSE:LYG) is the least popular one with only 8 bullish hedge fund positions. L3Harris Technologies, Inc. (NYSE:LHX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for LHX is 28.5. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 28.6% in 2021 through November 30th and surpassed the market again by 5.6 percentage points. Unfortunately LHX wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); LHX investors were disappointed as the stock returned -4.6% since the end of September (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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