We at Insider Monkey have gone over 752 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of September 30th. In this article, we look at what those funds think of L3Harris Technologies, Inc. (NYSE:LHX) based on that data.
L3Harris Technologies, Inc. (NYSE:LHX) was in 48 hedge funds' portfolios at the end of September. LHX investors should be aware of an increase in hedge fund interest of late. There were 30 hedge funds in our database with LHX positions at the end of the previous quarter. Our calculations also showed that LHX isn't among the 30 most popular stocks among hedge funds.
Today there are a large number of signals stock market investors employ to value stocks. A pair of the most innovative signals are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the best picks of the top money managers can outperform their index-focused peers by a superb amount (see the details here).
[caption id="attachment_670377" align="aligncenter" width="473"] Aaron Cowen of Suvretta Capital Management[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We're going to view the new hedge fund action regarding L3Harris Technologies, Inc. (NYSE:LHX).
How have hedgies been trading L3Harris Technologies, Inc. (NYSE:LHX)?
At Q3's end, a total of 48 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 60% from the second quarter of 2019. By comparison, 27 hedge funds held shares or bullish call options in LHX a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Citadel Investment Group was the largest shareholder of L3Harris Technologies, Inc. (NYSE:LHX), with a stake worth $580 million reported as of the end of September. Trailing Citadel Investment Group was Millennium Management, which amassed a stake valued at $287.6 million. GLG Partners, Suvretta Capital Management, and Two Sigma Advisors 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 SAYA Management allocated the biggest weight to L3Harris Technologies, Inc. (NYSE:LHX), around 17.58% of its portfolio. Clearfield Capital is also relatively very bullish on the stock, dishing out 17.07 percent of its 13F equity portfolio to LHX.
As industrywide interest jumped, specific money managers were leading the bulls' herd. Citadel Investment Group, managed by Ken Griffin, created the most outsized position in L3Harris Technologies, Inc. (NYSE:LHX). Citadel Investment Group had $580 million invested in the company at the end of the quarter. Israel Englander's Millennium Management also made a $287.6 million investment in the stock during the quarter. The other funds with brand new LHX positions are Noam Gottesman's GLG Partners, Aaron Cowen's Suvretta Capital Management, and John Overdeck and David Siegel's Two Sigma Advisors.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as L3Harris Technologies, Inc. (NYSE:LHX) but similarly valued. We will take a look at American Electric Power Company, Inc. (NYSE:AEP), Lloyds Banking Group PLC (NYSE:LYG), Applied Materials, Inc. (NASDAQ:AMAT), and Relx PLC (NYSE:RELX). All of these stocks' market caps are similar to LHX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AEP,31,1768736,4 LYG,7,52469,-1 AMAT,50,2356178,6 RELX,6,105678,3 Average,23.5,1070765,3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.5 hedge funds with bullish positions and the average amount invested in these stocks was $1071 million. That figure was $2487 million in LHX's case. Applied Materials, Inc. (NASDAQ:AMAT) is the most popular stock in this table. On the other hand Relx PLC (NYSE:RELX) is the least popular one with only 6 bullish hedge fund positions. L3Harris Technologies, Inc. (NYSE:LHX) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. Unfortunately LHX wasn't nearly as popular as these 20 stocks and hedge funds that were betting on LHX were disappointed as the stock returned -4.4% during the fourth quarter (through 11/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.