Hedge Funds Are Crazy About Freeport-McMoRan Inc. (FCX)

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 Freeport-McMoRan Inc. (NYSE:FCX).

Is Freeport-McMoRan Inc. (NYSE:FCX) an outstanding investment right now? Hedge funds are getting more optimistic. The number of bullish hedge fund bets advanced by 3 recently. Freeport-McMoRan Inc. (NYSE:FCX) was in 44 hedge funds’ portfolios at the end of the third quarter of 2015. There were 41 hedge funds in our database with Freeport-McMoRan Inc. (NYSE:FCX) holdings at the end of the previous quarter. 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 Kansas City Southern (NYSE:KSU), Foot Locker, Inc. (NYSE:FL), and H&R Block, Inc. (NYSE:HRB) to gather more data points.

To most investors, hedge funds are seen as worthless, old investment tools of the past. While there are over 8000 funds with their doors open at the moment, Our experts look at the bigwigs of this group, approximately 700 funds. These investment experts oversee the majority of the hedge fund industry’s total capital, and by following their unrivaled investments, Insider Monkey has figured out many investment strategies that have historically surpassed the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points a year for a decade in their back tests.

Now, let’s take a look at the key action surrounding Freeport-McMoRan Inc. (NYSE:FCX).

How are hedge funds trading Freeport-McMoRan Inc. (NYSE:FCX)?

Heading into Q4, a total of 44 of the hedge funds tracked by Insider Monkey held long positions in this stock, an increase of 7% from the previous quarter. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Icahn Capital LP holds the number one position in Freeport-McMoRan Inc. (NYSE:FCX). Icahn Capital LP has a $969 million position in the stock, comprising 3.5% of its 13F portfolio. On Icahn Capital LP’s heels is Discovery Capital Management, led by Rob Citrone, holding a $165.8 million position; the fund has 1.8% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish encompass Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital, and Mario Gabelli’s GAMCO Investors.

Now, key money managers have been driving this bullishness. Some other funds with brand new Freeport-McMoRan Inc. (NYSE:FCX) positions are Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital, Buckley Ratchford’s Wingspan Investment Management, and Remy Trafelet’s Trafelet Capital.

Let’s also examine hedge fund activity in other stocks similar to Freeport-McMoRan Inc. (NYSE:FCX). We will take a look at Kansas City Southern (NYSE:KSU), Foot Locker, Inc. (NYSE:FL), H&R Block, Inc. (NYSE:HRB), and CGI Group Inc. (USA) (NYSE:GIB). This group of stocks’ market values matches Freeport-McMoRan Inc. (NYSE:FCX)’s market value.

As you can see, these stocks had an average of 30 hedge funds with bullish positions and the average amount invested in these stocks was $827 million. That figure was $1.39 billion in Freeport-McMoRan Inc. (NYSE:FCX)’s case. H&R Block, Inc. (NYSE:HRB) is the most popular stock in this table. On the other hand, CGI Group Inc. (USA) (NYSE:GIB) is the least popular one with only 11 bullish hedge fund positions. Freeport-McMoRan Inc. (NYSE:FCX) 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. In this regard, H&R Block, Inc. (NYSE:HRB) might be a better candidate to consider a long position.