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FMC Corporation (FMC): Hedge Funds Are Snapping Up

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In this article we are going to use hedge fund sentiment as a tool and determine whether FMC Corporation (NYSE:FMC) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds' picks don't beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.

FMC Corporation (NYSE:FMC) shareholders have witnessed an increase in hedge fund sentiment recently. FMC Corporation (NYSE:FMC) was in 33 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 46. There were 32 hedge funds in our database with FMC holdings at the end of March. Our calculations also showed that FMC isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.

10 best stocks according to billionaire Larry Robbins
10 best stocks according to billionaire Larry Robbins

Larry Robbins of Glenview Capital

At Insider Monkey, we scour multiple sources to uncover 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 EV 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. With all of this in mind let's go over the fresh hedge fund action surrounding FMC Corporation (NYSE:FMC).

Do Hedge Funds Think FMC Is A Good Stock To Buy Now?

Heading into the third quarter of 2021, a total of 33 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in FMC over the last 24 quarters. With hedgies' capital changing hands, there exists a few notable hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Cardinal Capital, managed by Amy Minella, holds the biggest position in FMC Corporation (NYSE:FMC). Cardinal Capital has a $102.6 million position in the stock, comprising 2.5% of its 13F portfolio. Sitting at the No. 2 spot is Glenview Capital, led by Larry Robbins, holding a $94.4 million position; the fund has 1.6% of its 13F portfolio invested in the stock. Other professional money managers that hold long positions encompass D. E. Shaw's D E Shaw, Charles Paquelet's Skylands Capital and Phill Gross and Robert Atchinson's Adage Capital Management. In terms of the portfolio weights assigned to each position Lodge Hill Capital allocated the biggest weight to FMC Corporation (NYSE:FMC), around 4.01% of its 13F portfolio. Skylands Capital is also relatively very bullish on the stock, earmarking 2.8 percent of its 13F equity portfolio to FMC.

Now, key hedge funds have been driving this bullishness. Adage Capital Management, managed by Phill Gross and Robert Atchinson, established the most outsized position in FMC Corporation (NYSE:FMC). Adage Capital Management had $15.2 million invested in the company at the end of the quarter. Ray Dalio's Bridgewater Associates also initiated a $4.8 million position during the quarter. The other funds with brand new FMC positions are Paul Marshall and Ian Wace's Marshall Wace LLP, Donald Sussman's Paloma Partners, and Greg Poole's Echo Street Capital Management.

Let's check out hedge fund activity in other stocks similar to FMC Corporation (NYSE:FMC). These stocks are New Oriental Education & Technology Group Inc. (NYSE:EDU), Avalara, Inc. (NYSE:AVLR), Icahn Enterprises LP (NASDAQ:IEP), Open Text Corporation (NASDAQ:OTEX), Korea Electric Power Corporation (NYSE:KEP), Evergy, Inc. (NYSE:EVRG), and Campbell Soup Company (NYSE:CPB). This group of stocks' market valuations are similar to FMC's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EDU,39,590421,-6 AVLR,29,1031140,-12 IEP,4,13111036,0 OTEX,14,300643,-2 KEP,4,18930,0 EVRG,21,1039354,-9 CPB,27,430218,-1 Average,19.7,2360249,-4.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.7 hedge funds with bullish positions and the average amount invested in these stocks was $2360 million. That figure was $372 million in FMC's case. New Oriental Education & Technology Group Inc. (NYSE:EDU) is the most popular stock in this table. On the other hand Icahn Enterprises LP (NASDAQ:IEP) is the least popular one with only 4 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 69. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.9% in 2021 through October 15th and beat the market again by 4.5 percentage points. Unfortunately FMC wasn't nearly as popular as these 5 stocks and hedge funds that were betting on FMC were disappointed as the stock returned -14.1% since the end of June (through 10/15) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.