Hedge Funds Are Betting On FMC Corp (FMC)

Hedge funds are not perfect. They have their bad picks just like everyone else. Micron, a stock hedge funds have loved, lost 50% during the last 12 months ending in October 30. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% in the same time period, vs. a gain of 5.2% for the S&P 500 Index. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of FMC Corp (NYSE:FMC).

Is FMC Corp (NYSE:FMC) a sound investment right now? The best stock pickers are in a bullish mood. The number of bullish hedge fund bets rose by 12 in recent months. 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 Avis Budget Group Inc. (NASDAQ:CAR), Northstar Realty Finance Corp. (NYSE:NRF), and Patterson Companies, Inc. (NASDAQ:PDCO) to gather more data points.

To most shareholders, hedge funds are viewed as unimportant, old investment tools of yesteryear. While there are greater than 8000 funds with their doors open today, We choose to focus on the crème de la crème of this club, about 700 funds. Most estimates calculate that this group of people administers the majority of the hedge fund industry’s total asset base, and by keeping an eye on their best picks, Insider Monkey has identified a number of investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outperformed the S&P 500 index by 12 percentage points a year for a decade in their back tests.

With all of this in mind, let’s check out the key action surrounding FMC Corp (NYSE:FMC).

Hedge fund activity in FMC Corp (NYSE:FMC)

At the end of the third quarter, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, an increase of 57% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Larry Robbins’s Glenview Capital has the biggest position in FMC Corp (NYSE:FMC), worth close to $226.3 million, corresponding to 1.1% of its total 13F portfolio. The second most bullish fund manager is Atlantic Investment Management, managed by Alexander Roepers, which holds a $181 million position; 17.2% of its 13F portfolio is allocated to the company. Other professional money managers that hold long positions include Robert Joseph Caruso’s Select Equity Group, Jeffrey Bronchick’s Cove Street Capital, and Michael Price’s MFP Investors.

Consequently, some big names have been driving this bullishness. Cove Street Capital established the largest position in FMC Corp (NYSE:FMC). Cove Street Capital had $28.9 million invested in the company at the end of the quarter. Mark Kingdon’s Kingdon Capital also made a $17 million investment in the stock during the quarter. The other funds with brand new FMC positions are Renaissance Technologies, Glenn Russell Dubin’s Highbridge Capital Management, and Anand Parekh’s Alyeska Investment Group.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as FMC Corp (NYSE:FMC) but similarly valued. These stocks are Avis Budget Group Inc. (NASDAQ:CAR), Northstar Realty Finance Corp. (NYSE:NRF), Patterson Companies, Inc. (NASDAQ:PDCO), and BOK Financial Corporation (NASDAQ:BOKF). This group of stocks’ market caps matches FMC Corp (NYSE:FMC)’s market cap.

As you can see, these stocks had an average of 35 hedge funds with bullish positions and the average amount invested in these stocks was $1.14 billion. That figure was $659 million in FMC Corp (NYSE:FMC)’s case. Northstar Realty Finance Corp. (NYSE:NRF) is the most popular stock in this table. On the other hand, BOK Financial Corporation (NASDAQ:BOKF) is the least popular one with only 10 bullish hedge fund positions. FMC Corp (NYSE:FMC) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Northstar Realty Finance Corp. (NYSE:NRF) might be a better candidate to consider a long position.