Miller Value Partners, an investment management firm, published its “Miller Value Partners Deep Value Strategy” second-quarter 2022 investor letter – a copy of which can be downloaded here. The Deep Value Strategy had a very disappointing second quarter experiencing significant valuation contraction during the period. For the quarter, the Deep Value Strategy was down more than 30%, significantly lagging the S&P 1500 Value Index and the overall market. For the year, the Strategy is down about 10%, ahead of the S&P 1500 Value Index and the overall market. Go over the fund’s top 5 positions to have a glimpse of its finest picks for 2022.
In its Q2 2022 investor letter, Miller Value Partners Deep Value Strategy Fund mentioned FMC Corporation (NYSE:FMC) and explained its insights for the company. Founded in 1883, FMC Corporation (NYSE:FMC) is a Philadelphia, Pennsylvania-based chemical manufacturing company with a $13.7 billion market capitalization. FMC Corporation (NYSE:FMC) delivered a -0.71% return since the beginning of the year, while its 12-month returns are up by 2.35%. The stock closed at $109.11 per share on August 01, 2022.
Here is what Miller Value Partners Deep Value Strategy has to say about FMC Corporation (NYSE:FMC) in its Q2 2022 investor letter:
“We also believe that a lot of Energy equities remain mispriced. The sector generated negative returns in four of the last six years (2015, 2017, 2018, and 2020). Even with a strong 2021 and start to 2022, the Energy sector 10-year returns at the end of the 2nd quarter are only 4.3% versus 18.7% for Technology and 13% for the overall S&P 500. Our two energy holdings – Nabors Industries (NYSE:NBR) and TechnipFMC (NYSE:FMC) – are oil service companies that recently experienced multi-year trough conditions. Given the delayed industry Capital Expenditure (“capex”) recovery, both companies have only recently seen higher utilization rates, improved pricing, higher margins, and growing backlogs. It is also important to note that their revenue isn’t directly tied to a commodity price but to industry capital spending trends. Both management teams see a multi-year positive industry capex cycle with oil prices greater than $70/share. Nabors and TechnipFMC share prices are still 75% below their 5-year highs, at low single-digit cash flow multiples, and normalized free cash flow yields in excess of 30%. Both companies have significant price-to-value gaps that offer the potential to generate very positive long-term returns.”
louis-reed-pwcKF7L4-no-unsplash
Our calculations show that FMC Corporation (NYSE:FMC) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. FMC Corporation (NYSE:FMC) was in 26 hedge fund portfolios at the end of the second quarter of 2022, compared to 27 funds in the previous quarter. FMC Corporation (NYSE:FMC) delivered a -17.20% return in the past 3 months.
In May 2022, we also shared another hedge fund’s views on FMC Corporation (NYSE:FMC) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q2 page.
Disclosure: None. This article is originally published at Insider Monkey.
