Is Forward Pharma A/S (FWP) A Good Stock to Buy?

We view hedge fund activity in the stock as unfavorable, but in this case there was only a single hedge fund selling its entire position: EcoR1 Capital. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 700+ hedge funds tracked by Insider Monkey identified FWP as a viable investment and initiated a position in the stock.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Forward Pharma A/S (NASDAQ:FWP) but similarly valued. These stocks are US Ecology Inc. (NASDAQ:ECOL), Healthways, Inc. (NASDAQ:HWAY), Rush Enterprises, Inc. (NASDAQ:RUSHA), and Windstream Corporation (NASDAQ:WIN). All of these stocks’ market caps are similar to FWP’s market cap.

As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $128 million. That figure was $208 million in FWP’s case. Healthways, Inc. (NASDAQ:HWAY) is the most popular stock in this table. On the other hand US Ecology Inc. (NASDAQ:ECOL) is the least popular one with only 8 bullish hedge fund positions. Forward Pharma A/S (NASDAQ:FWP) 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. In this regard HWAY might be a better candidate to consider taking a long position in.

Disclosure: None