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Is FMC Corporation (FMC) Going to Burn These Hedge Funds?

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 823 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 June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. 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.

Is FMC Corporation (NYSE:FMC) a healthy stock for your portfolio? Hedge funds were taking a bullish view. The number of long hedge fund positions improved by 3 lately. FMC Corporation (NYSE:FMC) was in 42 hedge funds’ portfolios at the end of June. The all time high for this statistics is 46. Our calculations also showed that FMC isn’t among the 30 most popular stocks among hedge funds (click for Q2 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 56 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 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Matthew Hulsizer PEAK6 Capital

Matthew Hulsizer of PEAK6 Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock.. We go through lists like the 10 most profitable companies in America to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Now let’s take a glance at the fresh hedge fund action regarding FMC Corporation (NYSE:FMC).

Hedge fund activity in FMC Corporation (NYSE:FMC)

Heading into the third quarter of 2020, a total of 42 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from one quarter earlier. On the other hand, there were a total of 36 hedge funds with a bullish position 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.

Among these funds, Citadel Investment Group held the most valuable stake in FMC Corporation (NYSE:FMC), which was worth $122.3 million at the end of the third quarter. On the second spot was Glenview Capital which amassed $114.3 million worth of shares. Pelham Capital, Cardinal Capital, and Skylands Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Pelham Capital allocated the biggest weight to FMC Corporation (NYSE:FMC), around 9.88% of its 13F portfolio. Albar Capital is also relatively very bullish on the stock, dishing out 5.08 percent of its 13F equity portfolio to FMC.

As aggregate interest increased, key money managers have jumped into FMC Corporation (NYSE:FMC) headfirst. Adage Capital Management, managed by Phill Gross and Robert Atchinson, assembled the most valuable position in FMC Corporation (NYSE:FMC). Adage Capital Management had $14.7 million invested in the company at the end of the quarter. Louis Bacon’s Moore Global Investments also initiated a $3.4 million position during the quarter. The other funds with new positions in the stock are Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners, Renaissance Technologies, and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as FMC Corporation (NYSE:FMC) but similarly valued. These stocks are Galapagos NV (NASDAQ:GLPG), Martin Marietta Materials, Inc. (NYSE:MLM), Carnival Corporation & Plc (NYSE:CCL), Zillow Group Inc (NASDAQ:Z), Markel Corporation (NYSE:MKL), SK Telecom Co., Ltd. (NYSE:SKM), and Insulet Corporation (NASDAQ:PODD). This group of stocks’ market valuations match FMC’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GLPG 13 151392 -2
MLM 51 1593527 7
CCL 31 362150 0
Z 59 2299780 22
MKL 33 943795 1
SKM 8 129598 3
PODD 44 985462 8
Average 34.1 923672 5.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 34.1 hedge funds with bullish positions and the average amount invested in these stocks was $924 million. That figure was $549 million in FMC’s case. Zillow Group Inc (NASDAQ:Z) is the most popular stock in this table. On the other hand SK Telecom Co., Ltd. (NYSE:SKM) is the least popular one with only 8 bullish hedge fund positions. FMC Corporation (NYSE:FMC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FMC is 68.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 33% in 2020 through the end of August and beat the market by 23.2 percentage points. Unfortunately FMC wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on FMC were disappointed as the stock returned 7.3% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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