Last year’s fourth quarter was a rough one for investors and many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 4.8% during 2018 and average hedge fund losing about 1%. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by more than 6 percentage points, as investors fled less-known quantities for safe havens. Luckily hedge funds were shifting their holdings into large-cap stocks. The 20 most popular hedge fund stocks actually generated an average return of 41.1% in 2019 (through December 23) and outperformed the S&P 500 ETF by more than 10 percentage points. In this article we will study how hedge fund sentiment towards FMC Corporation (NYSE:FMC) changed during the third quarter and how the stock performed in comparison to hedge fund consensus stocks.
FMC Corporation (NYSE:FMC) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 36 hedge funds’ portfolios at the end of September. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as InterContinental Hotels Group PLC (NYSE:IHG), Western Midstream Partners, LP (NYSE:WES), and Textron Inc. (NYSE:TXT) to gather more data points. Our calculations also showed that FMC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).
In the eyes of most traders, hedge funds are seen as unimportant, old investment vehicles of yesteryear. While there are greater than 8000 funds trading at present, Our researchers look at the leaders of this group, approximately 750 funds. These money managers command the lion’s share of the hedge fund industry’s total asset base, and by tailing their inimitable stock picks, Insider Monkey has come up with many investment strategies that have historically outperformed the market. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points a year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Crispin Odey of Odey Asset Management Group
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Keeping this in mind let’s take a look at the recent hedge fund action encompassing FMC Corporation (NYSE:FMC).
How are hedge funds trading FMC Corporation (NYSE:FMC)?
At the end of the third quarter, a total of 36 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2019. On the other hand, there were a total of 37 hedge funds with a bullish position in FMC a year ago. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
More specifically, Glenview Capital was the largest shareholder of FMC Corporation (NYSE:FMC), with a stake worth $375.6 million reported as of the end of September. Trailing Glenview Capital was Thunderbird Partners, which amassed a stake valued at $133.7 million. Cardinal Capital, Millennium Management, and AQR Capital Management 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 Thunderbird Partners allocated the biggest weight to FMC Corporation (NYSE:FMC), around 18.11% of its 13F portfolio. Corsair Capital Management is also relatively very bullish on the stock, setting aside 4.82 percent of its 13F equity portfolio to FMC.
Due to the fact that FMC Corporation (NYSE:FMC) has faced a decline in interest from the aggregate hedge fund industry, we can see that there was a specific group of funds that elected to cut their full holdings last quarter. Interestingly, Brandon Haley’s Holocene Advisors dumped the largest stake of the “upper crust” of funds watched by Insider Monkey, totaling close to $57.3 million in stock. Javier Velazquez’s fund, Albar Capital, also dumped its stock, about $11.9 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks similar to FMC Corporation (NYSE:FMC). We will take a look at InterContinental Hotels Group PLC (NYSE:IHG), Western Midstream Partners, LP (NYSE:WES), Textron Inc. (NYSE:TXT), and Jack Henry & Associates, Inc. (NASDAQ:JKHY). This group of stocks’ market values are closest to FMC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IHG | 7 | 29788 | 3 |
| WES | 10 | 107648 | 1 |
| TXT | 23 | 658405 | 0 |
| JKHY | 18 | 181183 | 0 |
| Average | 14.5 | 244256 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $244 million. That figure was $789 million in FMC’s case. Textron Inc. (NYSE:TXT) is the most popular stock in this table. On the other hand InterContinental Hotels Group PLC (NYSE:IHG) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks FMC Corporation (NYSE:FMC) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Hedge funds were also right about betting on FMC as the stock returned 58.6% so far in 2019 (through 12/23) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
