Is Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) a buy here? Hedge funds are becoming more confident. The number of bullish hedge fund bets moved up by 9 recently.
According to most shareholders, hedge funds are assumed to be slow, old financial tools of yesteryear. While there are greater than 8000 funds trading at the moment, we look at the top tier of this club, about 450 funds. It is estimated that this group controls the lion's share of the smart money's total asset base, and by keeping an eye on their best investments, we have come up with a few investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we've began to sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 25 percentage points in 6.5 month (see all of our picks from August).
Just as beneficial, bullish insider trading activity is another way to break down the marketplace. Obviously, there are a number of incentives for an insider to sell shares of his or her company, but only one, very clear reason why they would buy. Various empirical studies have demonstrated the market-beating potential of this strategy if you know what to do (learn more here).
Keeping this in mind, we're going to take a gander at the key action regarding Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX).
At year's end, a total of 63 of the hedge funds we track held long positions in this stock, a change of 17% from the previous quarter. With the smart money's capital changing hands, there exists a few key hedge fund managers who were boosting their holdings substantially.
Of the funds we track, Paulson & Co, managed by John Paulson, holds the largest position in Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX). Paulson & Co has a $308 million position in the stock, comprising 1.9% of its 13F portfolio. Sitting at the No. 2 spot is Sean Cullinan of Point State Capital, with a $120 million position; the fund has 1.8% of its 13F portfolio invested in the stock. Some other hedge funds that are bullish include Phill Gross and Robert Atchinson's Adage Capital Management, Leon Cooperman's Omega Advisors and Tony Chedraoui's Tyrus Capital.
As aggregate interest increased, specific money managers have been driving this bullishness. Paulson & Co, managed by John Paulson, assembled the biggest position in Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX). Paulson & Co had 308 million invested in the company at the end of the quarter. Leon Cooperman's Omega Advisors also initiated a $106 million position during the quarter. The other funds with new positions in the stock are Tony Chedraoui's Tyrus Capital, Jean-Marie Eveillard's First Eagle Investment Management, and Keith Meister's Corvex Capital.
Insider trading activity, especially when it's bullish, is best served when the company we're looking at has experienced transactions within the past half-year. Over the last six-month time period, Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) has seen 1 unique insiders buying, and zero insider sales (see the details of insider trades here).
With the returns demonstrated by our tactics, everyday investors should always keep an eye on hedge fund and insider trading activity, and Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) applies perfectly to this mantra.
Insider Monkey's small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.