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With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter of 2021. One of these stocks was Freeport-McMoRan Inc. (NYSE:FCX).
Is FCX a good stock to buy? Freeport-McMoRan Inc. (NYSE:FCX) was in 66 hedge funds' portfolios at the end of the third quarter of 2021. The all time high for this statistic is 76. FCX has experienced a decrease in support from the world's most elite money managers of late. There were 76 hedge funds in our database with FCX holdings at the end of June. Our calculations also showed that FCX isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Keeping this in mind we're going to take a look at the key hedge fund action encompassing Freeport-McMoRan Inc. (NYSE:FCX).
Crispin Odey of Odey Asset Management Group
Do Hedge Funds Think FCX Is A Good Stock To Buy Now?
At Q3's end, a total of 66 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from the second quarter of 2021. The graph below displays the number of hedge funds with bullish position in FCX over the last 25 quarters. With hedge funds' capital changing hands, there exists an "upper tier" of key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Ken Fisher's Fisher Asset Management has the largest position in Freeport-McMoRan Inc. (NYSE:FCX), worth close to $1.5286 billion, amounting to 0.9% of its total 13F portfolio. The second most bullish fund manager is Two Sigma Advisors, led by John Overdeck and David Siegel, holding a $296.9 million position; 0.8% of its 13F portfolio is allocated to the company. Remaining professional money managers with similar optimism consist of D. E. Shaw's D E Shaw, Suzi Nutton (CEO)'s Lansdowne Partners and Stanley Druckenmiller's Duquesne Capital. In terms of the portfolio weights assigned to each position Lansdowne Partners allocated the biggest weight to Freeport-McMoRan Inc. (NYSE:FCX), around 8.68% of its 13F portfolio. Kadensa Capital is also relatively very bullish on the stock, earmarking 5.63 percent of its 13F equity portfolio to FCX.
Since Freeport-McMoRan Inc. (NYSE:FCX) has witnessed falling interest from hedge fund managers, logic holds that there were a few money managers who sold off their entire stakes in the third quarter. At the top of the heap, Matthew Stadelman's Diamond Hill Capital dropped the biggest position of the "upper crust" of funds watched by Insider Monkey, comprising close to $425.3 million in stock. Josh Donfeld and David Rogers's fund, Castle Hook Partners, also cut its stock, about $47.1 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 10 funds in the third quarter.
Let's also examine hedge fund activity in other stocks similar to Freeport-McMoRan Inc. (NYSE:FCX). We will take a look at Fortinet Inc (NASDAQ:FTNT), Agilent Technologies Inc. (NYSE:A), Enterprise Products Partners L.P. (NYSE:EPD), American International Group Inc (NYSE:AIG), Exelon Corporation (NASDAQ:EXC), TC Energy Corporation (NYSE:TRP), and Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX). This group of stocks' market values match FCX's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FTNT,38,1139238,6 A,46,3135637,7 EPD,25,233255,-3 AIG,30,1904264,-9 EXC,36,1108781,1 TRP,15,84084,-7 VRTX,55,2713283,-5 Average,35,1474077,-1.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 35 hedge funds with bullish positions and the average amount invested in these stocks was $1474 million. That figure was $3213 million in FCX's case. Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) is the most popular stock in this table. On the other hand TC Energy Corporation (NYSE:TRP) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Freeport-McMoRan Inc. (NYSE:FCX) is more popular among hedge funds. Our overall hedge fund sentiment score for FCX is 71.1. 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 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 returned 28.6% in 2021 through November 30th but still managed to beat the market by 5.6 percentage points. Hedge funds were also right about betting on FCX as the stock returned 14.2% since the end of September (through 11/30) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.