Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Freeport-McMoRan Inc. (NYSE:FCX).
Freeport-McMoRan Inc. (NYSE:FCX) investors should be aware of an increase in hedge fund sentiment in recent months. Freeport-McMoRan Inc. (NYSE:FCX) was in 61 hedge funds’ portfolios at the end of December. The all time high for this statistic was previously 57. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 57 hedge funds in our database with FCX holdings at the end of September. Our calculations also showed that FCX isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Kerr Neilson of Platinum Asset Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now let’s take a gander at the new hedge fund action encompassing Freeport-McMoRan Inc. (NYSE:FCX).
Do Hedge Funds Think FCX Is A Good Stock To Buy Now?
At the end of December, a total of 61 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from one quarter earlier. On the other hand, there were a total of 55 hedge funds with a bullish position in FCX a year ago. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
Among these funds, Fisher Asset Management held the most valuable stake in Freeport-McMoRan Inc. (NYSE:FCX), which was worth $1115.2 million at the end of the fourth quarter. On the second spot was Lansdowne Partners which amassed $204.8 million worth of shares. Duquesne Capital, Slate Path Capital, and Platinum Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Polunin Capital allocated the biggest weight to Freeport-McMoRan Inc. (NYSE:FCX), around 10.85% of its 13F portfolio. Prince Street Capital Management is also relatively very bullish on the stock, earmarking 9.9 percent of its 13F equity portfolio to FCX.
As one would reasonably expect, some big names have been driving this bullishness. Renaissance Technologies, initiated the most outsized position in Freeport-McMoRan Inc. (NYSE:FCX). Renaissance Technologies had $25.6 million invested in the company at the end of the quarter. David Tepper’s Appaloosa Management LP also made a $24.3 million investment in the stock during the quarter. The following funds were also among the new FCX investors: Ben Gambill’s Tiger Eye Capital, Paul Tudor Jones’s Tudor Investment Corp, and Wayne Cooperman’s Cobalt Capital Management.
Let’s go over hedge fund activity in other stocks similar to Freeport-McMoRan Inc. (NYSE:FCX). We will take a look at Liberty Broadband Corp (NASDAQ:LBRDA), Biogen Inc. (NASDAQ:BIIB), The Trade Desk, Inc. (NASDAQ:TTD), The Bank of New York Mellon Corporation (NYSE:BK), Microchip Technology Incorporated (NASDAQ:MCHP), Cintas Corporation (NASDAQ:CTAS), and Chewy, Inc. (NYSE:CHWY). This group of stocks’ market caps are similar to FCX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LBRDA | 26 | 908617 | 1 |
| BIIB | 63 | 2752928 | 4 |
| TTD | 35 | 1195309 | 12 |
| BK | 47 | 4689872 | -1 |
| MCHP | 45 | 961474 | 10 |
| CTAS | 36 | 746276 | -2 |
| CHWY | 38 | 728528 | -8 |
| Average | 41.4 | 1711858 | 2.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 41.4 hedge funds with bullish positions and the average amount invested in these stocks was $1712 million. That figure was $2665 million in FCX’s case. Biogen Inc. (NASDAQ:BIIB) is the most popular stock in this table. On the other hand Liberty Broadband Corp (NASDAQ:LBRDA) is the least popular one with only 26 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. Our overall hedge fund sentiment score for FCX is 86.3. 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on FCX as the stock returned 45.2% since the end of Q4 (through 4/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
