Huntington Ingalls Industries (HII) is Unlocking Its Growth Potential

Soumya Eswaran

Mon, February 16, 2026 at 11:36 PM GMT+9 3 min read

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Sound Shore Management, an investment management firm, has released its investor letter for the fourth quarter of 2025. You can download a copy of the report here. In Q4 2025, The Sound Shore Fund Investor Class (SSHFX) and Institutional Class (SSHVX) advanced 7.83% and 7.87%, respectively, compared to the S&P 500’s 2.66% return and the Russell 1000 Value Index’s 3.81%. In 2025, the SSHFX and SSHVX returned 18.20% and 18.42%, respectively, ahead of the S&P 500’s 17.88% return and Russell Value’s return of 15.91%. Despite initial worries about policy changes, inflation, and economic growth, investors’ confidence improved in the second half of the year, and equities rose through year-end. Healthcare was the leading performer in the fourth quarter. The Fund’s performance was driven by a diverse group of companies across sectors in an AI and technology-dominated market. The firm focuses on identifying opportunities in industry shifts, management transitions, and undervalued assets. Please review the Strategy’s top five holdings to gain insights into their key selections for 2025.

In its fourth-quarter 2025 investor letter, Sound Shore Management highlighted Huntington Ingalls Industries, Inc. (NYSE:HII) as one of its leading contributors. Huntington Ingalls Industries, Inc. (NYSE:HII) is a US-based military shipbuilding company. On February 13, 2026, Huntington Ingalls Industries, Inc. (NYSE:HII) stock closed at $418.78 per share. One-month return of Huntington Ingalls Industries, Inc. (NYSE:HII) was -1.67%, and its shares are up 159.68% over the past twelve months. Huntington Ingalls Industries, Inc. (NYSE:HII) has a market capitalization of $16.434 billion.

Sound Shore Management stated the following regarding Huntington Ingalls Industries, Inc. (NYSE:HII) in its fourth quarter 2025 investor letter:

“Likewise, Huntington Ingalls Industries, Inc. (NYSE:HII), the largest US Naval shipbuilder, was another standout 2025 performer. HII, as it is also known, constructs nuclear and non-nuclear warships for the Navy and Coast Guard and also provides after-market services for those ships worldwide. We purchased the stock when it was trading at a below normal 13 times earnings with a 7% free cash flow yield. Having worked through the complexity of post-COVID supply chain and labor productivity issues, the stock soared after posting better than expected earnings and dramatic growth in its backlog. With the US Navy’s commitment to rapidly expand the fleet, and the prospect of further margin gains with project completions, we believe the stock is just beginning to reflect its growth potential.”

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Was Jim Cramer Right About Huntington Ingalls Industries Inc. (HII)?

Huntington Ingalls Industries, Inc. (NYSE:HII) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 39 hedge fund portfolios held Huntington Ingalls Industries, Inc. (NYSE:HII) at the end of the third quarter, up from 36 in the previous quarter. In 2025, Huntington Ingalls Industries, Inc. (NYSE:HII) reporter revenues of $12.5 billion, reflecting an 8.2% increase from 2024. While we acknowledge the potential of Huntington Ingalls Industries, Inc. (NYSE:HII) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Huntington Ingalls Industries, Inc. (NYSE:HII) and shared a list of best defense stocks to buy in the S&P 500. In addition, please check out our hedge fund investor letters Q4 2025 page for more investor letters from hedge funds and other leading investors.

READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money.

Disclosure: None. This article is originally published at Insider Monkey.

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