Is FWRD A Good Stock To Buy Now?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Forward Air Corporation (NASDAQ:FWRD) in this article.

Is FWRD a good stock to buy now? Forward Air Corporation (NASDAQ:FWRD) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 15 hedge funds’ portfolios at the end of the third quarter of 2020. Our calculations also showed that FWRD isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). 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 Sandstorm Gold Ltd. (NYSE:SAND), Healthcare Services Group, Inc. (NASDAQ:HCSG), and Owens & Minor, Inc. (NYSE:OMI) to gather more data points.

Video: Watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Fred DiSanto Ancora Advisors

Fred DiSanto of Ancora Advisors

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind we’re going to take a glance at the fresh hedge fund action regarding Forward Air Corporation (NASDAQ:FWRD).

Do Hedge Funds Think FWRD Is A Good Stock To Buy Now?

At the end of September, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. By comparison, 21 hedge funds held shares or bullish call options in FWRD a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Royce & Associates held the most valuable stake in Forward Air Corporation (NASDAQ:FWRD), which was worth $34.2 million at the end of the third quarter. On the second spot was Ancora Advisors which amassed $29 million worth of shares. Arrowstreet Capital, GLG Partners, and Intrinsic Edge Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Running Oak Capital allocated the biggest weight to Forward Air Corporation (NASDAQ:FWRD), around 1.8% of its 13F portfolio. Ancora Advisors is also relatively very bullish on the stock, dishing out 1.15 percent of its 13F equity portfolio to FWRD.

Judging by the fact that Forward Air Corporation (NASDAQ:FWRD) has faced a decline in interest from hedge fund managers, it’s easy to see that there exists a select few money managers that decided to sell off their entire stakes heading into Q4. It’s worth mentioning that Michael Gelband’s ExodusPoint Capital dropped the largest position of the “upper crust” of funds tracked by Insider Monkey, comprising an estimated $2.1 million in stock. Greg Eisner’s fund, Engineers Gate Manager, also sold off its stock, about $2.1 million worth. These moves are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now review hedge fund activity in other stocks similar to Forward Air Corporation (NASDAQ:FWRD). We will take a look at Sandstorm Gold Ltd. (NYSE:SAND), Healthcare Services Group, Inc. (NASDAQ:HCSG), Owens & Minor, Inc. (NYSE:OMI), Enviva Partners, LP (NYSE:EVA), Albany International Corp. (NYSE:AIN), Vital Farms, Inc. (NASDAQ:VITL), and ChampionX Corporation (NYSE:CHX). All of these stocks’ market caps are closest to FWRD’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SAND 13 118878 -3
HCSG 23 130910 -4
OMI 19 233340 4
EVA 6 44281 -2
AIN 17 46431 -2
VITL 11 58142 11
CHX 27 383178 -3
Average 16.6 145023 0.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.6 hedge funds with bullish positions and the average amount invested in these stocks was $145 million. That figure was $119 million in FWRD’s case. ChampionX Corporation (NYSE:CHX) is the most popular stock in this table. On the other hand Enviva Partners, LP (NYSE:EVA) is the least popular one with only 6 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. Our overall hedge fund sentiment score for FWRD is 47.9. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on FWRD as the stock returned 28% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.

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