FMC Technologies, Inc. (NYSE:FTI), a supplier of equipment and services for the energy industry, released its earnings results for the second quarter of 2015 this, falling short of expectations. The North American company is facing enormous decline as a result of the falling price of crude that has subsequently resulted in a slump in land market. FMC Technologies, Inc posted earnings per share of $0.52, $0.10 lower that what analysts at Zacks expected. The figure represents a 27.8% decline year-over-year. Revenue too was down, as the company posted $1.70 billion compared to $1.99 billion in the same quarter last year. Zacks analysts had a consensus estimate of $1.72 billion for the quarter. The company’s main segments, namely, subsea technologies, surface technologies, and energy infrastructure, were all down during the quarter compared to a year ago. Subsea technologies posted $1.24 billion, representing a 6.7% decline; surface technologies slumped by about 29% to $363.30 million; while energy infrastructure posted the biggest decline, of 32% to $101.40 million. Shares of FMC are now down by 2% today and 11% over the past two days.
The dip is contrary to the very bullish outlook smart money had on the stock entering the second quarter. At the end of the first quarter of 2015, a total of 30 of the hedge funds tracked by Insider Monkey were long in this stock, an increase of 20% from the fourth quarter of 2014. The aggregate value of the investments of the 30 hedge funds stood at $710.49 million, up greatly from just $298.93 million at the end of the fourth quarter of last year. This was a result of the increase in the number of hedge funds invested in the stock at the end of the first quarter, and the fact that some hedgies upped their positions considerably. The massive increase in holdings was despite a 20% drop in share price during the quarter, showing the smart money clearly felt the entry point had been reached and very bullishly entered it. They were not wrong in the second quarter, as shares rebounded by nearly 10%. Given that they may have reduced their positions in the second quarter, we’ll reserve judgement on whether they made a mistake upping their stakes in the first quarter or not.
We also take keen interest on hedge fund activities relating to the stocks in our database, with particular interest in their 13F filings. Why are we interested in the 13F filings of a select group of hedge funds? We use these filings to determine the top 15 small-cap stocks held by these elite funds based on 16 years of research that showed their top small-cap picks are much more profitable than both their large-cap stocks and the broader market as a whole; yet investors have been stuck (until now) investing in all of a hedge fund’s stocks: the good, the bad, and the ugly. Why pay fees to invest in both the best and worst ideas of a particular hedge fund when you can simply mimic the best ideas of the best fund managers on your own? These top small-cap stocks beat the S&P 500 Total Return Index by an average of nearly one percentage point per month in our backtests, which were conducted over the period of 1999 to 2012. Even better, since the beginning of forward testing at the end of August 2012, the strategy worked just as our research predicted and then some, outperforming the market every year and returning 139% over the last 34 months, which is more than 80 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).
Insider Monkey also keenly tracks insider activity relating to stocks. Because the decline in the stock is a reflection of the energy industry, most insiders are confident that as soon as the sector jumps, they will register gains and are hanging on to their shares. There was just one insider sale made this year, along with no purchases. The sale was by Director de Carvalho Filho Eleazar, who sold 3,098 shares in May.
Having noted that, let’s take a look at the latest action regarding FMC Technologies, Inc. (NYSE:FTI).