Northrop Grumman Corporation (NYSE:NOC) has seen a decrease in hedge fund sentiment lately.
In the 21st century investor’s toolkit, there are a multitude of indicators shareholders can use to analyze their holdings. A duo of the most innovative are hedge fund and insider trading activity. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the top hedge fund managers can outperform the market by a healthy amount (see just how much).
Equally as key, bullish insider trading activity is a second way to parse down the investments you’re interested in. There are a variety of incentives for an insider to downsize shares of his or her company, but only one, very clear reason why they would initiate a purchase. Several academic studies have demonstrated the market-beating potential of this method if shareholders understand what to do (learn more here).
Consequently, it’s important to take a glance at the latest action encompassing Northrop Grumman Corporation (NYSE:NOC).
Hedge fund activity in Northrop Grumman Corporation (NYSE:NOC)
Heading into 2013, a total of 21 of the hedge funds we track were bullish in this stock, a change of -13% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their holdings substantially.
When looking at the hedgies we track, Jean-Marie Eveillard’s First Eagle Investment Management had the biggest position in Northrop Grumman Corporation (NYSE:NOC), worth close to $424 million, comprising 1.5% of its total 13F portfolio. The second largest stake is held by Pzena Investment Management, managed by Richard S. Pzena, which held a $260 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other hedge funds that are bullish include Cliff Asness’s AQR Capital Management, and David Harding’s Winton Capital Management.
Since Northrop Grumman Corporation (NYSE:NOC) has faced falling interest from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of money managers that elected to cut their entire stakes heading into 2013. Intriguingly, Phill Gross and Robert Atchinson’s Adage Capital Management dropped the largest position of the 450+ funds we monitor, valued at about $11 million in stock., and David Dreman of Dreman Value Management was right behind this move, as the fund said goodbye to about $1 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 3 funds heading into 2013.
What have insiders been doing with Northrop Grumman Corporation (NYSE:NOC)?
Insider buying is particularly usable when the company we’re looking at has experienced transactions within the past six months. Over the latest half-year time period, Northrop Grumman Corporation (NYSE:NOC) has seen 1 unique insiders purchasing, and 5 insider sales (see the details of insider trades here).
With the returns shown by our tactics, retail investors must always watch hedge fund and insider trading sentiment, and Northrop Grumman Corporation (NYSE:NOC) applies perfectly to this mantra.
Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.