Cooper Tire & Rubber Company (NYSE:CTB) has seen booming interest from the smart money of late. Should you follow?
Now, according to many of your fellow readers, hedge funds are assumed to be overrated, old investment tools of a forgotten age. Although there are more than 8,000 hedge funds trading currently, this site looks at the moguls of this club, about 525 funds. Analysts calculate that this group has its hands on most of all hedge funds’ total capital, and by tracking their highest performing stock picks, we’ve brought to light a few investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 33 percentage points in 11 months (find the details here).
Just as key, bullish insider trading activity is another way to analyze the marketplace. As the old adage goes: there are a variety of reasons for a bullish insider to get rid of shares of his or her company, but only one, very clear reason why they would initiate a purchase. Various academic studies have demonstrated the market-beating potential of this method if piggybackers understand what to do (learn more here).
Furthermore, it’s important to study the newest info surrounding Cooper Tire & Rubber Company (NYSE:CTB).
Hedge fund activity in Cooper Tire & Rubber Company (NYSE:CTB)
At Q2’s end, a total of 30 of the hedge funds we track were bullish in this stock, a change of 36% from the previous quarter. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were upping their holdings significantly.
According to our 13F database, John Paulson’s Paulson & Co had the largest position in Cooper Tire & Rubber Company (NYSE:CTB), worth close to $165.9 million, comprising 1.2% of its total 13F portfolio. The second largest stake is held by Robert Emil Zoellner of Alpine Associates, with a $72.3 million position; the fund has 2.9% of its 13F portfolio invested in the stock. Remaining hedgies with similar optimism include David Dreman’s Dreman Value Management, Andrew J. M. Spokes’s Farallon Capital and Alec Litowitz and Ross Laser’s Magnetar Capital.
As industrywide interest increased, specific money managers have jumped into Cooper Tire & Rubber Company (NYSE:CTB) headfirst. Paulson & Co, managed by John Paulson, assembled the biggest position in Cooper Tire & Rubber Company (NYSE:CTB). Paulson & Co had 165.9 million invested in the company at the end of the quarter. Robert Emil Zoellner’s Alpine Associates also initiated a $72.3 million position during the quarter. The other funds with new positions in the stock are David Dreman’s Dreman Value Management, Andrew J. M. Spokes’s Farallon Capital, and Alec Litowitz and Ross Laser’s Magnetar Capital.
Insider trading activity in Cooper Tire & Rubber Company (NYSE:CTB)
Insider buying made by high-level executives is most useful when the company in question has experienced transactions within the past half-year. Over the last six-month time frame, Cooper Tire & Rubber Company (NYSE:CTB) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).
We’ll also review the relationship between both of these indicators in other stocks similar to Cooper Tire & Rubber Company (NYSE:CTB). These stocks are Rogers Corporation (NYSE:ROG), The Goodyear Tire & Rubber Company (NASDAQ:GT), Tredegar Corporation (NYSE:TG), Titan International Inc (NYSE:TWI), and Berry Plastics Group Inc (NYSE:BERY). This group of stocks belong to the rubber & plastics industry and their market caps resemble CTB’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Rogers Corporation (NYSE:ROG) | 12 | 0 | 0 |
| The Goodyear Tire & Rubber Company (NASDAQ:GT) | 33 | 0 | 0 |
| Tredegar Corporation (NYSE:TG) | 5 | 0 | 0 |
| Titan International Inc (NYSE:TWI) | 15 | 0 | 0 |
| Berry Plastics Group Inc (NYSE:BERY) | 23 | 0 | 0 |
Using the returns demonstrated by the previously mentioned tactics, average investors must always keep one eye on hedge fund and insider trading activity, and Cooper Tire & Rubber Company (NYSE:CTB) is no exception.
