In this article we will check out the progression of hedge fund sentiment towards FMC Corporation (NYSE:FMC) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is FMC Corporation (NYSE:FMC) the right pick for your portfolio? Investors who are in the know were taking a bullish view. The number of bullish hedge fund bets rose by 3 lately. FMC Corporation (NYSE:FMC) was in 42 hedge funds’ portfolios at the end of June. The all time high for this statistics is 46. Our calculations also showed that FMC isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). There were 39 hedge funds in our database with FMC positions at the end of the first quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most stock holders, hedge funds are viewed as slow, old financial vehicles of the past. While there are more than 8000 funds with their doors open at present, Our experts hone in on the moguls of this group, about 850 funds. These hedge fund managers preside over bulk of the hedge fund industry’s total capital, and by keeping an eye on their first-class equity investments, Insider Monkey has identified several investment strategies that have historically surpassed Mr. Market. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
Larry Robbins of Glenview Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than quadrupled this year. We are trying to identify other EV revolution winners, so we are checking out this under-the-radar lithium stock. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. Keeping this in mind we’re going to view the recent hedge fund action surrounding FMC Corporation (NYSE:FMC).
What have hedge funds been doing with FMC Corporation (NYSE:FMC)?
At the end of June, a total of 42 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from one quarter earlier. On the other hand, there were a total of 36 hedge funds with a bullish position in FMC a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in FMC Corporation (NYSE:FMC) was held by Citadel Investment Group, which reported holding $122.3 million worth of stock at the end of September. It was followed by Glenview Capital with a $114.3 million position. Other investors bullish on the company included Pelham Capital, Cardinal Capital, and Skylands Capital. In terms of the portfolio weights assigned to each position Pelham Capital allocated the biggest weight to FMC Corporation (NYSE:FMC), around 9.88% of its 13F portfolio. Albar Capital is also relatively very bullish on the stock, dishing out 5.08 percent of its 13F equity portfolio to FMC.
As one would reasonably expect, specific money managers have been driving this bullishness. Adage Capital Management, managed by Phill Gross and Robert Atchinson, created the largest position in FMC Corporation (NYSE:FMC). Adage Capital Management had $14.7 million invested in the company at the end of the quarter. Louis Bacon’s Moore Global Investments also made a $3.4 million investment in the stock during the quarter. The following funds were also among the new FMC investors: Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners, Renaissance Technologies, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s also examine hedge fund activity in other stocks similar to FMC Corporation (NYSE:FMC). These stocks are Galapagos NV (NASDAQ:GLPG), Martin Marietta Materials, Inc. (NYSE:MLM), Carnival Corporation & Plc (NYSE:CCL), Zillow Group Inc (NASDAQ:Z), Markel Corporation (NYSE:MKL), SK Telecom Co., Ltd. (NYSE:SKM), and Insulet Corporation (NASDAQ:PODD). This group of stocks’ market caps are similar to FMC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GLPG | 13 | 151392 | -2 |
| MLM | 51 | 1593527 | 7 |
| CCL | 31 | 362150 | 0 |
| Z | 59 | 2299780 | 22 |
| MKL | 33 | 943795 | 1 |
| SKM | 8 | 129598 | 3 |
| PODD | 44 | 985462 | 8 |
| Average | 34.1 | 923672 | 5.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 34.1 hedge funds with bullish positions and the average amount invested in these stocks was $924 million. That figure was $549 million in FMC’s case. Zillow Group Inc (NASDAQ:Z) is the most popular stock in this table. On the other hand SK Telecom Co., Ltd. (NYSE:SKM) is the least popular one with only 8 bullish hedge fund positions. FMC Corporation (NYSE:FMC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FMC is 68.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 30% in 2020 through October 23rd and beat the market by 21 percentage points. Unfortunately FMC wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on FMC were disappointed as the stock returned 8.6% since the end of June (through 10/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.
