Did Hedge Funds Make The Right Call On FMC Corporation (FMC)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. We are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article we look at how hedge funds traded FMC Corporation (NYSE:FMC) and determine whether the smart money was really smart about this stock.

FMC Corporation (NYSE:FMC) shareholders have witnessed an increase in hedge fund sentiment in recent months. FMC was in 39 hedge funds’ portfolios at the end of March. There were 35 hedge funds in our database with FMC positions at the end of the previous quarter. Our calculations also showed that FMC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Donald Sussman Paloma Partners

Donald Sussman of Paloma Partners

At Insider Monkey we scour multiple sources to uncover the next great investment idea. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so we are checking out this tiny lithium stock. Keeping this in mind let’s check out the fresh hedge fund action regarding FMC Corporation (NYSE:FMC).

How are hedge funds trading FMC Corporation (NYSE:FMC)?

At Q1’s end, a total of 39 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from one quarter earlier. By comparison, 29 hedge funds held shares or bullish call options in FMC a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is FMC A Good Stock To Buy?

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Larry Robbins’s Glenview Capital has the largest position in FMC Corporation (NYSE:FMC), worth close to $158.7 million, amounting to 4.3% of its total 13F portfolio. The second largest stake is held by Citadel Investment Group, led by Ken Griffin, holding a $81.5 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors with similar optimism consist of Ross Turner’s Pelham Capital, Amy Minella’s Cardinal Capital and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Pelham Capital allocated the biggest weight to FMC Corporation (NYSE:FMC), around 10.53% of its 13F portfolio. Albar Capital is also relatively very bullish on the stock, earmarking 8.54 percent of its 13F equity portfolio to FMC.

Now, some big names were leading the bulls’ herd. Pelham Capital, managed by Ross Turner, created the most valuable position in FMC Corporation (NYSE:FMC). Pelham Capital had $72.8 million invested in the company at the end of the quarter. Jos Shaver’s Electron Capital Partners also made a $10.9 million investment in the stock during the quarter. The following funds were also among the new FMC investors: Steve Cohen’s Point72 Asset Management, Jonathan Barrett and Paul Segal’s Luminus Management, and Lee Ainslie’s Maverick Capital.

Let’s now take a look at hedge fund activity in other stocks similar to FMC Corporation (NYSE:FMC). These stocks are Fifth Third Bancorp (NASDAQ:FITB), Brookfield Infrastructure Partners L.P. (NYSE:BIP), Jacobs Engineering Group Inc. (NYSE:J), and KB Financial Group, Inc. (NYSE:KB). This group of stocks’ market values are similar to FMC’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FITB 30 384097 -11
BIP 14 55630 3
J 28 995596 -7
KB 7 37837 2
Average 19.75 368290 -3.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.75 hedge funds with bullish positions and the average amount invested in these stocks was $368 million. That figure was $560 million in FMC’s case. Fifth Third Bancorp (NASDAQ:FITB) is the most popular stock in this table. On the other hand KB Financial Group, Inc. (NYSE:KB) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks FMC Corporation (NYSE:FMC) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th but still managed to beat the market by 15.5 percentage points. Hedge funds were also right about betting on FMC, though not to the same extent, as the stock returned 22.5% in Q2 and outperformed the market as well.

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Disclosure: None. This article was originally published at Insider Monkey.