The successful funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we will take a closer look at Forward Air Corporation (NASDAQ:FWRD) from the perspective of those successful funds.
Forward Air Corporation (NASDAQ:FWRD) was included in the equity portfolios of 16 funds from our database at the end of September. The company experienced an increase in activity from the world’s largest hedge funds during the third quarter, as there had been 13 funds bullish on the stock at the end of June. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Horace Mann Educators Corporation (NYSE:HMN), Noah Holdings Limited (ADR) (NYSE:NOAH), and Cheetah Mobile Inc (ADR) (NYSE:CMCM) to gather more data points.
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 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
Now, we’re going to go over the key action regarding Forward Air Corporation (NASDAQ:FWRD).
Hedge fund activity in Forward Air Corporation (NASDAQ:FWRD)
At the end of the third quarter, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, up by 23% from the second quarter of 2016. The graph below displays the number of hedge funds with bullish position in FWRD over the last five quarters. 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 $78.6 million, accounting for 0.5% of its total 13F portfolio. On Royce & Associates’s heels is Mariko Gordon’s Daruma Asset Management, with a $32.6 million position; 2% of its 13F portfolio is allocated to the company. Remaining peers that hold long positions consist of David Brown’s Hawk Ridge Management, Israel Englander’s Millennium Management, and Jim Simons’ Renaissance Technologies. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. Point72 Asset Management, led by Steve Cohen, initiated the most outsized position in Forward Air Corporation (NASDAQ:FWRD). Point72 Asset Management had $0.6 million invested in the company at the end of September. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $0.5 million position during the third quarter. The other funds with brand new FWRD positions are Paul Tudor Jones’ Tudor Investment Corp and Matthew Tewksbury’s Stevens Capital Management.
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. We will take a look at Horace Mann Educators Corporation (NYSE:HMN), Noah Holdings Limited (ADR) (NYSE:NOAH), Cheetah Mobile Inc (ADR) (NYSE:CMCM), and Globant SA (NYSE:GLOB). This group of stocks’ market caps match FWRD’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of nine funds with bullish positions and the average amount invested in these stocks was $40 million. That figure was $149 million in FWRD’s case. Horace Mann Educators Corporation (NYSE:HMN) is the most popular stock in this table. On the other hand Cheetah Mobile Inc (ADR) (NYSE:CMCM) is the least popular one with only five bullish hedge fund positions. Compared to these stocks Forward Air Corporation (NASDAQ:FWRD) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.