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Is Freeport-McMoRan (FCX) Stock A Buy or Sell?

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Debasis Saha
·6 min read
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Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Freeport-McMoRan Inc. (NYSE:FCX), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Is FCX stock a buy or sell? Freeport-McMoRan Inc. (NYSE:FCX) has experienced an increase in hedge fund interest 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 is 57. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that FCX isn't among the 30 most popular stocks among hedge funds (click for Q4 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. 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 124 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

DUQUESNE CAPITAL
DUQUESNE CAPITAL

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 (or at the end of this article). Now we're going to review the key hedge fund action encompassing Freeport-McMoRan Inc. (NYSE:FCX).

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

Heading into the first quarter of 2021, a total of 61 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 7% from the third quarter of 2020. On the other hand, there were a total of 55 hedge funds with a bullish position in FCX a year ago. With the smart money's sentiment swirling, there exists a few notable hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).

Is FCX A Good Stock To Buy?
Is FCX A Good Stock To Buy?

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, setting aside 9.9 percent of its 13F equity portfolio to FCX.

As aggregate interest increased, specific money managers have been driving this bullishness. Renaissance Technologies, created 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 initiated a $24.3 million position during the quarter. The other funds with new positions in the stock are Ben Gambill's Tiger Eye Capital, Paul Tudor Jones's Tudor Investment Corp, and Wayne Cooperman's Cobalt Capital Management.

Let's also examine 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). All of these stocks' market caps match FCX's market cap.

[table] 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 [/table]

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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and still beat the market by 0.8 percentage points. Hedge funds were also right about betting on FCX as the stock returned 34.5% since the end of Q4 (through 3/19) 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.

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