Freeport-McMoRan Inc (NYSE:FCX) is up by just under 1% in morning trading after the company terminated a drillship contract with offshore driller Rowan Companies PLC (NYSE:RDC). In return for terminating the contract, Freeport-McMoRan will pay Rowan $215 million in cash. The agreement should save Freeport-McMoRan $300 million in additional payments for the drillship’s services. Freeport-McMoRan Inc (NYSE:FCX) has been steadily retreating from activity in the higher-cost offshore market, as the company focuses on attractive land-based oil and gas opportunities. Just a few weeks ago, Freeport-McMoRan agreed to pay another offshore driller, Noble Corporation (NYSE:NE), $540 million and up to $75 million in contingent payments to cancel agreements involving two other drillships. Investors view the retreat as good news, as it will ultimately save Freeport-McMoRan capex cash in the long run.
Heading into the second quarter of 2016, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, an 8% drop from one quarter earlier. According to Insider Monkey’s hedge fund database, Icahn Capital LP, managed by Carl Icahn, holds the most valuable position in Freeport-McMoRan (NYSE:FCX). Icahn Capital LP has a $1.08 billion position in the stock, comprising 5% of its 13F portfolio. On Icahn Capital LP’s heels is Discovery Capital Management, managed by Rob Citrone, which holds a $102.5 million position; 1.5% of its 13F portfolio is allocated to the stock. Other members of the smart money that are bullish consist of Ken Griffin’s Citadel Investment Group, David Halpert’s Prince Street Capital Management, and John Overdeck and David Siegel’s Two Sigma Advisors.
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On the next page we are going to take a look at the latest trading activity in Freeport-McMoRan. At the end of this article we will also compare FCX to other stocks, including Liberty Media Corp (NASDAQ:LMCA), Cameron International Corporation (NYSE:CAM), CA, Inc. (NASDAQ:CA) to get a better sense of its popularity.
Due to the fact that Freeport-McMoRan (NYSE:FCX) has faced declining sentiment from hedge fund managers, it’s easy to see that there exists a select few fund managers that elected to cut their entire stakes heading into Q2. At the top of the heap, David Tepper’s Appaloosa Management LP dumped the biggest investment of the “upper crust” of funds watched by Insider Monkey, valued at about $24.1 million in stock. John Burbank’s fund, Passport Capital, also sold off its stock, about $18.9 million worth. These transactions are interesting, as total hedge fund interest dropped by 3 funds heading into Q2.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Freeport-McMoRan (NYSE:FCX) but similarly valued. We will take a look at Liberty Media Corp (NASDAQ:LMCA), Cameron International Corporation (NYSE:CAM), CA, Inc. (NASDAQ:CA), and Huaneng Power International Inc (ADR) (NYSE:HNP). This group of stocks’ market valuations are similar to FCX’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LMCA | 38 | 1161067 | -3 |
| CAM | 45 | 2816222 | -2 |
| CA | 23 | 316577 | -2 |
| HNP | 5 | 11409 | 2 |
As you can see these stocks had an average of 27.75 hedge funds with bullish positions and the average amount invested in these stocks was $1.08 billion. That figure was $1.59 billion in FCX’s case. Cameron International Corporation (NYSE:CAM) is the most popular stock in this table. On the other hand Huaneng Power International Inc (ADR) (NYSE:HNP) is the least popular one with only 5 bullish hedge fund positions. Freeport-McMoRan (NYSE:FCX) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CAM might be a better candidate to consider a long position in.
Disclosure: None
