A Board Member’s Limited Partnerships Keep Buying Freeport-McMoRan Copper & Gold Inc. (FCX)

Page 1 of 2

According to a Form 4 filed with the SEC, two limited partnerships connected to Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) Board member James Flores together purchased over 500,000 shares of stock in late July at prices of about $28.65 per share. Studies show that stocks bought by insiders tend to narrowly outperform the market on average (read our analysis of studies on insider trading) and this makes some amount of sense since unless they are confident in the $28 billion market cap basic materials company’s prospects insiders should prefer to diversify their wealth. Investors can’t imitate every insider purchase, and shouldn’t do so blindly, but these stocks can serve as initial ideas for further research.

Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) has fallen over 25% since the beginning of December 2012 on a number of factors. First, the company announced that acquisition of two oil and gas companies; markets believed that management might be overpaying for these acquisitions, in addition to more common concerns regarding a lack of focus as production diversified. In the second quarter of 2013, Freeport-McMoRan’s product sales slipped slightly versus a year earlier and with production costs increasing the business experienced a more than 50% decrease in operating income. To some degree this is a one time event as the company adds its oil and gas subsidiaries (which had been struggling prior to the transaction).

Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX)Earnings per share in Q2 were 49 cents; annualizing that figure yields a P/E multiple of 14 at current prices. It’s possible that Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) will better integrate its new acquisitions over time, leading to more efficient operations, but the dominant factor swaying its returns will be commodity prices. The gold market has been weak year to date, and copper prices are also down year to date on macro concerns including worries that Chinese growth is slowing dramatically. Income investors should note that Freeport-McMoRan currently pays a dividend yield of more than 4%.

In addition to insider trading activity, Insider Monkey tracks quarterly 13F filings from hundreds of hedge funds as part of our work developing investment strategies (for example, we have found that the most popular small cap stocks among hedge funds generate an average excess return of 18 percentage points per year). This database also allows us to track interest in individual stocks over time. Billionaire John Paulson’s Paulson & Co. reported a position of 9 million shares in Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) at the end of March (see Paulson’s stock picks).

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Largest Pharmaceutical Companies In the World

The 10 Most Expensive Android Apps

The 9 Most Expensive Designer Bags in the World

The 7 Most Expensive Real Estate in the World

The 10 Most Expensive eBay Items Ever Sold

The 10 Most Expensive iPhone Apps

The 9 Most Expensive Designer Shoes in the World

The 10 Most Expensive Cigarette Brands

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!