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Forest Laboratories, Inc. (FRX): Hedge Funds Aren’t Crazy About It, Insider Sentiment Unchanged

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Is Forest Laboratories, Inc. (NYSE:FRX) a sell?

If you were to ask many investors, hedge funds are seen as delayed, old financial tools of an era lost to time. Although there are more than 8,000 hedge funds in operation currently, this site aim at the bigwigs of this group, close to 525 funds. It is widely held that this group controls the majority of the hedge fund industry’s total assets, and by keeping an eye on their highest performing equity investments, we’ve brought to light a number of investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).

Equally as useful, positive insider trading sentiment is a second way to analyze the financial markets. There are plenty of motivations for an upper level exec to drop shares of his or her company, but just one, very clear reason why they would behave bullishly. Several academic studies have demonstrated the market-beating potential of this strategy if “monkeys” understand where to look (learn more here).

What’s more, we’re going to study the newest info about Forest Laboratories, Inc. (NYSE:FRX).

What have hedge funds been doing with Forest Laboratories, Inc. (NYSE:FRX)?

At Q2’s end, a total of 30 of the hedge funds we track were long in this stock, a change of -14% from the first quarter. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their holdings meaningfully.

Forest Laboratories, Inc. (NYSE:FRX)Out of the hedge funds we follow, Carl Icahn’s Icahn Capital LP had the most valuable position in Forest Laboratories, Inc. (NYSE:FRX), worth close to $1.2571 billion, comprising 5.8% of its total 13F portfolio. Coming in second is Natixis Global Asset Management of Harris Associates, with a $433.9 million position; 0.9% of its 13F portfolio is allocated to the stock. Remaining hedge funds that are bullish include Peter Rathjens Bruce Clarke and John Campbell’s Arrowstreet Capital, Ken Griffin’s Citadel Investment Group and Bill Miller’s Legg Mason Capital Management.

Judging by the fact that Forest Laboratories, Inc. (NYSE:FRX) has faced a fall in interest from the smart money’s best and brightest, logic holds that there were a few fund managers that elected to cut their entire stakes in Q1. It’s worth mentioning that Sanford J. Colen’s Apex Capital dumped the largest investment of the “upper crust” of funds we key on, valued at an estimated $19 million in stock. Roberto Mignone’s fund, Bridger Management, also said goodbye to its stock, about $17.1 million worth. These transactions are interesting, as total hedge fund interest was cut by 5 funds in Q1.

How have insiders been trading Forest Laboratories, Inc. (NYSE:FRX)?

Insider buying is best served when the company in question has experienced transactions within the past six months. Over the last 180-day time period, Forest Laboratories, Inc. (NYSE:FRX) has experienced zero unique insiders buying, and 2 insider sales (see the details of insider trades here).

We’ll also review the relationship between both of these indicators in other stocks similar to Forest Laboratories, Inc. (NYSE:FRX). These stocks are Allergan, Inc. (NYSE:AGN), Warner Chilcott Plc (NASDAQ:WCRX), Endo Health Solutions Inc (NASDAQ:ENDP), Dr. Reddy’s Laboratories Limited (ADR) (NYSE:RDY), and Pharmacyclics, Inc. (NASDAQ:PCYC). This group of stocks are in the drug manufacturers – other industry and their market caps match FRX’s market cap.

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