Aerospace and defense companies are distinctly faddish in the market. They go up and down in major movements as different contracts are announced and new products developed. The average investor may not know much about this industry, but it can be quite lucrative. Hedge fund managers, with their teams of analysts, stand a much better chance of decoding (and profiting on) aerospace and defense industry happenings, so watching what these investors do with regard to this industry can be very valuable.
Here is a list of aerospace and defense companies that hedge funds are buying. Investors can use this list as a starting point for their own research.
Goodrich Corp (GR): Of the 300+ hedge funds we track, 47 had positions in GR at the end of the third quarter, up from just 32 at the end of the second quarter. Total hedge fund investment in the company also increased, going from $1.70 billion at the end of June to $2.81 billion at the end of September. Frank Brosens’ Taconic Capital initiated a new $331.87 million position in the company. James Dinan’s York Capital Management also initiated a large position in GR during the third quarter, valued at $274.87 million at the end of September.
Transdigm Group, Inc. (TDG): Hedge fund investment in TDG increased in the third quarter, moving from 32 at the end of June to 35 at the end of September. However, the total volume of that investment decreased somewhat, going from $1.09 billion at the end of the second quarter to $887.16 million at the end of the third quarter. Stephen Mandel’s Lone Pine Capital had $252.33 million invested in TDG after upping its stake in the company by +2% in the third quarter.
General Dynamics Corp (GD): There were 35 hedge funds invested in GD at the end of September, up from 32 at the end of June. Total hedge fund investment did not fare as well, falling from $3.27 billion at the end of the second quarter to $2.70 billion at the end of the third quarter. James Star’s Longview Asset Management had $1.89 billion invested in GD at the end of the third quarter. Even Warren Buffett was bullish on the company, initiating a new $174.34 million position for his Berkshire Hathaway.
Lockheed Martin Corp (LMT): This company had 30 hedge funds invested in it at the end of the third quarter, down from 34 at the end of the second quarter. Total hedge fund investment in LMT also decreased, going from $977.12 million at the end of June to $887.40 million at the end of September. Jean-Marie Eveillard’s First Eagle Investment Management wasn’t fazed. The fund upped its stake in LMT by +10% in the third quarter to close September with a position valued at $273.66 million.
Boeing Co. (BA): Hedge fund investment in BA moved from $1.19 billion across 36 funds at the end of the second quarter to finish the third quarter with $997.93 million across 28 funds. The stock remained popular with Ken Fisher’s Fisher Asset Management. The fund had a position in BA valued at $311.96 million at the end of the third quarter.
BE Aerospace, Inc. (BEAV): The number of hedge funds invested in BEAV during the third quarter increased from 17 at the end of June to 22 at the end of September but the total volume of hedge fund investment in the company shrank from $187.26 million at the end of the second quarter to $147.37 million at the end of the third quarter. BEAV was popular with Wayne Cooperman’s Cobalt Capital Management in the third quarter. The fund upped its position in the company by 246% to close the quarter with a stake valued at $44.14 million.
Spirit Aerosystems Holdings, Inc. (SPR): There were 18 hedge funds invested in SPR at the end of the third quarter, with a total combined investment of $266.07 million, falling from $428.49 million invested by 21 funds at the end of the second quarter. In spite of the decline in overall hedge fund interest in the company, Phill Gross and Robert Atchinson’s Adage Capital Management was not deterred. The fund increased its stake in SPR by +9% to end September with a position in the company valued at $124.80 million.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.