We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Keeping this in mind, let’s take a look at whether Freeport-McMoRan Inc. (NYSE:FCX) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is Freeport-McMoRan Inc. (NYSE:FCX) a superb stock to buy now? Prominent investors are turning bullish. The number of long hedge fund bets rose by 14 recently. Our calculations also showed that FCX isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
Carl Icahn of Icahn Capital
We leave no stone unturned when looking for the next great investment idea. For example, this trader is claiming triple digit returns, so we check out his latest trade recommendations. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences (by the way watch this video if you want to hear one of the best healthcare hedge fund manager’s coronavirus analysis). Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to check out the fresh hedge fund action regarding Freeport-McMoRan Inc. (NYSE:FCX).
How are hedge funds trading Freeport-McMoRan Inc. (NYSE:FCX)?
At Q4’s end, a total of 55 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 34% from the third quarter of 2019. Below, you can check out the change in hedge fund sentiment towards FCX over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Ken Fisher’s Fisher Asset Management has the most valuable position in Freeport-McMoRan Inc. (NYSE:FCX), worth close to $493.5 million, comprising 0.5% of its total 13F portfolio. The second largest stake is held by Icahn Capital LP, led by Carl Icahn, holding a $351.2 million position; 1.3% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors that hold long positions comprise Stephen Mildenhall’s Contrarius Investment Management, David Greenspan’s Slate Path Capital and Martin Taylor’s Crake Asset Management. In terms of the portfolio weights assigned to each position Crake Asset Management allocated the biggest weight to Freeport-McMoRan Inc. (NYSE:FCX), around 12.51% of its 13F portfolio. Prince Street Capital Management is also relatively very bullish on the stock, designating 6.64 percent of its 13F equity portfolio to FCX.
As one would reasonably expect, key money managers were breaking ground themselves. Crake Asset Management, managed by Martin Taylor, initiated the largest position in Freeport-McMoRan Inc. (NYSE:FCX). Crake Asset Management had $61.9 million invested in the company at the end of the quarter. Stanley Druckenmiller’s Duquesne Capital also made a $60 million investment in the stock during the quarter. The other funds with new positions in the stock are Robert Bishop’s Impala Asset Management, Josh Donfeld and David Rogers’s Castle Hook Partners, and Richard Driehaus’s Driehaus Capital.
Let’s check out hedge fund activity in other stocks similar to Freeport-McMoRan Inc. (NYSE:FCX). These stocks are Ameren Corporation (NYSE:AEE), Western Digital Corporation (NASDAQ:WDC), Zoom Video Communications, Inc. (NASDAQ:ZM), and Incyte Corporation (NASDAQ:INCY). This group of stocks’ market valuations match FCX’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AEE | 31 | 1678648 | -1 |
| WDC | 49 | 869922 | 9 |
| ZM | 28 | 858177 | -5 |
| INCY | 46 | 3965633 | 11 |
| Average | 38.5 | 1843095 | 3.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 38.5 hedge funds with bullish positions and the average amount invested in these stocks was $1843 million. That figure was $1663 million in FCX’s case. Western Digital Corporation (NASDAQ:WDC) is the most popular stock in this table. On the other hand Zoom Video Communications, Inc. (NASDAQ:ZM) is the least popular one with only 28 bullish hedge fund positions. Compared to these stocks Freeport-McMoRan Inc. (NYSE:FCX) is more popular among hedge funds. 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 lost 1.0% in 2020 through April 20th and still beat the market by 11 percentage points. Unfortunately FCX wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on FCX were disappointed as the stock returned -38.6% during the three months of 2020 (through April 20th) 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 most of these stocks already outperformed the market in 2020.
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.
