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Why Freeport-McMoRan Inc (FCX) Fell Over 4% on Monday

Shares of Freeport-McMoRan Inc (NYSE:FCX) sank 4.6% on above average volume to close the first day of the week at $12.21 per share. The Dow Jones and S&P 500 by contrast, retreated just 0.22% and 0.1% for the day. At one point in the session, Freeport-McMoRan pierced the pivotal $12 per share mark to make a low of $11.91 per share.

Although the Grasberg mine uncertainty has been the main culprit for previous sessions’ sharp declines, the contract conditions surrounding Indonesian mine wasn’t the cause of Monday’s sell off. Neither were copper or WTI future prices, which didn’t move much in terms of closing prices (although they did show a lot of volatility along the way).

Instead, the momentary (or perhaps permanent) reversal of the Trump trade is to blame. Due to the House of Representatives failing to repeal and replace Obamacare on Friday, some traders feared that other parts of Trump’s agenda such as tax cuts and the proposed trillion dollar infrastructure program could be at risk too. Given that Freeport-McMoRan Inc (NYSE:FCX) is a major copper producer, and copper is used in almost every infrastructure project, Freeport-McMoRan Inc (NYSE:FCX)’s future fortunes are somewhat dependent on the infrastructure bill passing. Any perception of the infrastructure bill being delayed or downsized could negatively affect sentiment for Freeport-McMoRan Inc (NYSE:FCX).

Read on to see how the smart money perceives Freeport-McMoRan Inc (NYSE:FCX) and what we think of the Trump trade.

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What Does The Smart Money Sentiment Say?

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 39.7% gains over the past 12 months and outperformed the 24.1% gain enjoyed by the S&P 500 ETFs. Our enhanced small-cap hedge fund strategy returned more than 45% over the last 12 months and outperformed SPY by more than 30 percentage points over the last 4.5 years (see details here).

According to our data, the smart money became more bullish on Freeport-McMoRan Inc (NYSE:FCX) in the fourth quarter. Of the 742 elite funds we track, 43 funds owned $2.17 billion of Freeport-McMoRan Inc (NYSE:FCX) and accounted for 11.40% of the float on December 31, versus 36 funds and $1.55 billion respectively on September 30. Although Carl Icahn’s Icahn Capital LP trimmed its holding by 13% in the fourth quarter, the famous investor activist’s fund still owned over 91 million shares. Meanwhile both Robert Bishop‘s Impala Asset Management and Dmitry Balyasny‘s Balyasny Asset Management initiated new stakes of over 10 million shares in the copper miner from September 31 to December 31 of last year.

The Bottom Line

We think the sell off of Freeport-McMoRan Inc (NYSE:FCX) due to the perception that the Trump trade is over is a little rash. Although repealing Obamacare might have met substantial resistance in the House, passing through a much needed infrastructure bill will, in our opinion, be easier given that many Democrats will likely support it.


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