Do you track trading signals from smart money buying and selling trends? Institutions trade large volumes of stock at a time. Given the large volume, the trade can make the stock move significantly both on the upside, and the downside. Hence, for individual investors, trades made by institutional investors can be very meaningful.
For a closer look at stocks currently rejected by smart money institutional investors, we ran a screen.
We wanted to look at the healthcare sector because its a non-cyclical sector, which generates stable demand even in difficult economic times. We began by screening the healthcare sector for stocks that appear undervalued relative to earnings growth, with PEG below 1. Perhaps they appear undervalued for a reason...
We screened these names for those with bearish sentiment from institutional investors, with significant net institutional sales over the last quarter representing at least 5% of share float. This indicates that institutional investors such as hedge fund managers and mutual fund managers expect these names to underperform.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.
Do you think these names will drop like the smart money expects? Use this list as a starting point for your own analysis.
1. Forest Laboratories Inc. (NYSE:FRX): Develops, manufactures, and sells branded and generic forms of ethical drug products. Market cap at $8.75B, most recent closing price at $33.32. Net institutional sales in the current quarter at -13.4M shares, which represents about 5.76% of the company's float of 232.68M shares.
2. HCA Holdings, Inc. (NYSE:HCA): Offers healthcare services in the United States. Market cap at $13.85B, most recent closing price at $31.46. Net institutional sales in the current quarter at -86.9M shares, which represents about 42.95% of the company's float of 202.33M shares.
3. Questcor Pharmaceuticals, Inc. (QCOR): Provides prescription drugs for central nervous system and inflammatory disorders. Market cap at $1.5B, most recent closing price at $26.39. Net institutional sales in the current quarter at -3.0M shares, which represents about 5.48% of the company's float of 54.74M shares.
Institutional data sourced from Fidelity, all other data sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Business relationship disclosure: Business relationship disclosure: Kapitall is a team of analysts. This article was written by Sabina Bhatia, one of our writers. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.