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Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Forward Air Corporation (NASDAQ:FWRD).
Forward Air Corporation (NASDAQ:FWRD) was in 17 hedge funds' portfolios at the end of the first quarter of 2020. FWRD has seen a decrease in support from the world's most elite money managers of late. There were 20 hedge funds in our database with FWRD holdings at the end of the previous quarter. Our calculations also showed that FWRD 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.
According to most market participants, hedge funds are seen as underperforming, old financial vehicles of the past. While there are more than 8000 funds in operation at the moment, Our researchers hone in on the crème de la crème of this club, approximately 850 funds. These money managers preside over bulk of all hedge funds' total capital, and by keeping an eye on their best equity investments, Insider Monkey has unearthed several investment strategies that have historically outperformed Mr. Market. Insider Monkey's flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
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Peter Rathjens of Arrowstreet Capital[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let's view the new hedge fund action regarding Forward Air Corporation (NASDAQ:FWRD).
What does smart money think about Forward Air Corporation (NASDAQ:FWRD)?
At the end of the first quarter, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of -15% from the fourth quarter of 2019. On the other hand, there were a total of 15 hedge funds with a bullish position in FWRD a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Chuck Royce's Royce & Associates has the number one position in Forward Air Corporation (NASDAQ:FWRD), worth close to $37.2 million, comprising 0.5% of its total 13F portfolio. The second most bullish fund manager is Israel Englander of Millennium Management, with a $12.4 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other professional money managers that hold long positions comprise Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Noam Gottesman's GLG Partners and Renaissance Technologies. In terms of the portfolio weights assigned to each position Royce & Associates allocated the biggest weight to Forward Air Corporation (NASDAQ:FWRD), around 0.51% of its 13F portfolio. Algert Coldiron Investors is also relatively very bullish on the stock, designating 0.19 percent of its 13F equity portfolio to FWRD.
Due to the fact that Forward Air Corporation (NASDAQ:FWRD) has experienced falling interest from the entirety of the hedge funds we track, it's safe to say that there is a sect of hedgies that elected to cut their positions entirely in the first quarter. It's worth mentioning that Alexander Mitchell's Scopus Asset Management said goodbye to the biggest position of all the hedgies tracked by Insider Monkey, comprising an estimated $11.8 million in stock. David Harding's fund, Winton Capital Management, also cut its stock, about $2.8 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 3 funds in the first quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Forward Air Corporation (NASDAQ:FWRD) but similarly valued. These stocks are Builders FirstSource, Inc. (NASDAQ:BLDR), Shake Shack Inc (NYSE:SHAK), Adtalem Global Education Inc. (NYSE:ATGE), and 8x8, Inc. (NASDAQ:EGHT). This group of stocks' market caps are similar to FWRD's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BLDR,29,303590,-11 SHAK,22,393753,-3 ATGE,12,268581,-8 EGHT,20,368670,6 Average,20.75,333649,-4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.75 hedge funds with bullish positions and the average amount invested in these stocks was $334 million. That figure was $79 million in FWRD's case. Builders FirstSource, Inc. (NASDAQ:BLDR) is the most popular stock in this table. On the other hand Adtalem Global Education Inc. (NYSE:ATGE) is the least popular one with only 12 bullish hedge fund positions. Forward Air Corporation (NASDAQ:FWRD) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and 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 13.4% in 2020 through June 22nd and surpassed the market by 15.9 percentage points. Unfortunately FWRD wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); FWRD investors were disappointed as the stock returned -3.8% during the second quarter 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 most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.