Lockheed Martin Corporation (NYSE:LMT)’s space ambitions have been temporarily brought back down to earth. The Wall Street Journal has reported that NASA eliminated Lockheed Martin from contention for its next phase of delivery missions to the International Space Station, contracts that will be awarded in November and could total as much as $16 billion.
The decision to eliminate Lockheed Martin Corporation (NYSE:LMT) from consideration was made privately last year, and was reportedly due to the complexity and price of Lockheed’s proposal. NASA is operating under one of its smallest budgets in two decades when factoring inflation into the mix, with budget cuts having reduced its percentage of the Federal budget to record lows in recent years.
The result is a blow to Lockheed Martin Corporation (NYSE:LMT)’s ambitions to develop its space-faring technology, as it was hoping to use the project as a stepping stone to developing future space technology such as robotic vehicles. Instead, the firm will have to console itself with some of the defense contracts it’s recently been awarded, which includes a joint mission with Boeing Co (NYSE:BA) to launch, manage, and maintain military satellites. Boeing is one of the company’s still in the run for the NASA project, along with Elon Musk’s Space X, and Sierra Nevada.
The latest verdict by NASA appears to fall in-line with the hedge fund sentiment on Lockheed Martin and Boeing, as the smart money tracked by Insider Monkey much prefers the latter at the moment. Whether elite hedge funds collectively like a stock or not is an important metric to consider, as these large investors show a great level of skill and expertise when it comes to picking stocks. Our small-cap strategy involves imitating a portfolio of the 15 most popular small-cap picks among hedge funds and it has returned 118% since August 2012, beating the S&P 500 ETF (SPY) by over 60 percentage points (read more details here).
In Lockheed Martin, hedge fund ownership stood at 36 on June 30, while 44 held long positions in Boeing. Funds in our database held $1.13 billion worth of Lockheed’s shares, representing just 1.90% of its outstanding shares. While they also held just 1.70% of Boeing’s shares worth $1.6 billion, there was a clear trend of capital leaving Lockheed Martin and moving into Boeing in the second quarter. First Eagle Investment Management held the largest stake in Lockheed Martin in our database, owning 2.69 million shares as of June 30. Cliff Asness’ AQR Capital Management was next with a far smaller total of 968,000 shares.