Is Forward Air Corporation (FWRD) A Good Stock To Buy?

Based on the fact that hedge funds have collectively under-performed the market for several years, it would be easy to assume that their stock picks simply aren’t very good. However, our research shows this not to be the case. In fact, when it comes to their very top picks collectively, they show a strong ability to pick winning stocks. This year hedge funds’ top 30 stock picks easily bested the broader market, at 6.7% compared to 2.6%, despite there being a few duds in there like Facebook (even their collective wisdom isn’t perfect). The results show that there is plenty of merit to imitating the collective wisdom of top investors.

Is Forward Air Corporation (NASDAQ:FWRD) ready to rally soon? The best stock pickers are becoming less hopeful. The number of bullish hedge fund positions dropped by 1 recently. Our calculations also showed that fwrd isn’t among the 30 most popular stocks among hedge funds. FWRD was in 15 hedge funds’ portfolios at the end of September. There were 16 hedge funds in our database with FWRD holdings at the end of the previous quarter.

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 has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Chuck Royce

We’re going to review the key hedge fund action surrounding Forward Air Corporation (NASDAQ:FWRD).

What have hedge funds been doing with Forward Air Corporation (NASDAQ:FWRD)?

Heading into the fourth quarter of 2018, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from the second quarter of 2018. On the other hand, there were a total of 15 hedge funds with a bullish position in FWRD at the beginning of this year. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with FWRD Positions

The largest stake in Forward Air Corporation (NASDAQ:FWRD) was held by Royce & Associates, which reported holding $67.7 million worth of stock at the end of September. It was followed by GLG Partners with a $15.6 million position. Other investors bullish on the company included Citadel Investment Group, Two Sigma Advisors, and PDT Partners.

Judging by the fact that Forward Air Corporation (NASDAQ:FWRD) has witnessed declining sentiment from the entirety of the hedge funds we track, logic holds that there lies a certain “tier” of funds that decided to sell off their positions entirely last quarter. Intriguingly, Alexander Mitchell’s Scopus Asset Management said goodbye to the largest investment of the “upper crust” of funds tracked by Insider Monkey, totaling an estimated $8.5 million in stock. David Brown’s fund, Hawk Ridge Management, also dumped its stock, about $7.6 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 1 funds last quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Forward Air Corporation (NASDAQ:FWRD) but similarly valued. These stocks are Hope Bancorp, Inc. (NASDAQ:HOPE), KB Home (NYSE:KBH), Premier Financial Bancorp, Inc. (NASDAQ:PFBI), and Genworth Financial Inc (NYSE:GNW). This group of stocks’ market caps resemble FWRD’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HOPE 14 81903 7
KBH 17 331197 3
PFBI 4 15565 1
GNW 22 74106 0
Average 14.25 125693 2.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.25 hedge funds with bullish positions and the average amount invested in these stocks was $126 million. That figure was $101 million in FWRD’s case. Genworth Financial Inc (NYSE:GNW) is the most popular stock in this table. On the other hand Premier Financial Bancorp, Inc. (NASDAQ:PFBI) is the least popular one with only 4 bullish hedge fund positions. Forward Air Corporation (NASDAQ:FWRD) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard GNW might be a better candidate to consider a long position.

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