In this article we will check out the progression of hedge fund sentiment towards Lockheed Martin Corporation (NYSE:LMT) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is LMT stock a buy or sell? Lockheed Martin Corporation (NYSE:LMT) was in 53 hedge funds’ portfolios at the end of December. The all time high for this statistic is 55. LMT has experienced an increase in support from the world’s most elite money managers lately. There were 47 hedge funds in our database with LMT positions at the end of the third quarter. Our calculations also showed that LMT isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage (or at the end of this article). With all of this in mind we’re going to take a gander at the latest hedge fund action regarding Lockheed Martin Corporation (NYSE:LMT).
Do Hedge Funds Think LMT Is A Good Stock To Buy Now?
At Q4’s end, a total of 53 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 13% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards LMT over the last 22 quarters. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
The largest stake in Lockheed Martin Corporation (NYSE:LMT) was held by Arrowstreet Capital, which reported holding $544.7 million worth of stock at the end of December. It was followed by D E Shaw with a $406.2 million position. Other investors bullish on the company included GQG Partners, Millennium Management, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Heard Capital allocated the biggest weight to Lockheed Martin Corporation (NYSE:LMT), around 7.47% of its 13F portfolio. Adam Capital is also relatively very bullish on the stock, designating 3 percent of its 13F equity portfolio to LMT.
Consequently, key money managers were breaking ground themselves. Laurion Capital Management, managed by Benjamin A. Smith, initiated the largest position in Lockheed Martin Corporation (NYSE:LMT). Laurion Capital Management had $14.2 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also made a $5.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Michael Kharitonov and Jon David McAuliffe’s Voleon Capital, Matthew Tewksbury’s Stevens Capital Management, and Alec Litowitz and Ross Laser’s Magnetar Capital.
Let’s go over hedge fund activity in other stocks similar to Lockheed Martin Corporation (NYSE:LMT). We will take a look at Caterpillar Inc. (NYSE:CAT), Square, Inc. (NYSE:SQ), American Express Company (NYSE:AXP), Zoom Video Communications, Inc. (NASDAQ:ZM), The Estee Lauder Companies Inc (NYSE:EL), Intuitive Surgical, Inc. (NASDAQ:ISRG), and General Electric Company (NYSE:GE). This group of stocks’ market caps are similar to LMT’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 61.4 hedge funds with bullish positions and the average amount invested in these stocks was $7421 million. That figure was $2528 million in LMT’s case. Square, Inc. (NYSE:SQ) is the most popular stock in this table. On the other hand Intuitive Surgical, Inc. (NASDAQ:ISRG) is the least popular one with only 49 bullish hedge fund positions. Lockheed Martin Corporation (NYSE:LMT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for LMT is 43.9. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and surpassed the market again by 0.8 percentage points. Unfortunately LMT wasn’t nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); LMT investors were disappointed as the stock returned 0.8% since the end of December (through 3/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Follow Lockheed Martin Corp (NYSE:LMT)
Follow Lockheed Martin Corp (NYSE:LMT)
Disclosure: None. This article was originally published at Insider Monkey.