The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded The Goodyear Tire & Rubber Company (NASDAQ:GT) and determine whether the smart money was really smart about this stock.
Is The Goodyear Tire & Rubber Company (NASDAQ:GT) a buy here? Hedge funds were taking a pessimistic view. The number of long hedge fund positions retreated by 5 lately. The Goodyear Tire & Rubber Company (NASDAQ:GT) was in 21 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 38. Our calculations also showed that GT isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). There were 26 hedge funds in our database with GT holdings at the end of March.
Video: Watch our video about the top 5 most popular hedge fund stocks.
According to most investors, hedge funds are assumed to be underperforming, outdated financial tools of the past. While there are greater than 8000 funds trading at the moment, Our experts look at the leaders of this group, around 850 funds. These investment experts oversee the majority of the smart money’s total asset base, and by keeping an eye on their matchless investments, Insider Monkey has figured out many investment strategies that have historically beaten the market. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
Dmitry Balyasny of Balyasny Asset Management
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 precious metals prices. So, we are checking out this junior gold mining stock. We are also checking out this lithium company which could benefit from the electric car adoption. We go through lists like the 10 most profitable companies in the world 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 to get excerpts of these letters in your inbox. Now we’re going to view the recent hedge fund action regarding The Goodyear Tire & Rubber Company (NASDAQ:GT).
How are hedge funds trading The Goodyear Tire & Rubber Company (NASDAQ:GT)?
At Q2’s end, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -19% from the first quarter of 2020. On the other hand, there were a total of 30 hedge funds with a bullish position in GT a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, D E Shaw, managed by D. E. Shaw, holds the number one position in The Goodyear Tire & Rubber Company (NASDAQ:GT). D E Shaw has a $57.6 million position in the stock, comprising 0.1% of its 13F portfolio. The second most bullish fund manager is Appaloosa Management LP, managed by David Tepper, which holds a $44.7 million position; 0.8% of its 13F portfolio is allocated to the company. Remaining members of the smart money with similar optimism comprise Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Bruce Emery’s Greenvale Capital and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Greenvale Capital allocated the biggest weight to The Goodyear Tire & Rubber Company (NASDAQ:GT), around 3.1% of its 13F portfolio. Masters Capital Management is also relatively very bullish on the stock, designating 2.02 percent of its 13F equity portfolio to GT.
Due to the fact that The Goodyear Tire & Rubber Company (NASDAQ:GT) has witnessed falling interest from the smart money, it’s safe to say that there lies a certain “tier” of funds that elected to cut their positions entirely by the end of the second quarter. Intriguingly, Renaissance Technologies dumped the largest stake of all the hedgies monitored by Insider Monkey, comprising an estimated $10.2 million in stock. Brandon Haley’s fund, Holocene Advisors, also said goodbye to its stock, about $1.8 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 5 funds by the end of the second quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as The Goodyear Tire & Rubber Company (NASDAQ:GT) but similarly valued. We will take a look at Palomar Holdings, Inc. (NASDAQ:PLMR), Guangshen Railway Co. Ltd (NYSE:GSH), Altra Industrial Motion Corp. (NASDAQ:AIMC), Plexus Corp. (NASDAQ:PLXS), APi Group Corporation (NYSE:APG), CONMED Corporation (NASDAQ:CNMD), and Steven Madden, Ltd. (NASDAQ:SHOO). This group of stocks’ market valuations are closest to GT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PLMR | 15 | 76145 | 8 |
| GSH | 1 | 3274 | -1 |
| AIMC | 12 | 100558 | -3 |
| PLXS | 15 | 72081 | -1 |
| APG | 27 | 965610 | 27 |
| CNMD | 31 | 300154 | 2 |
| SHOO | 20 | 64755 | 2 |
| Average | 17.3 | 226082 | 4.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.3 hedge funds with bullish positions and the average amount invested in these stocks was $226 million. That figure was $185 million in GT’s case. CONMED Corporation (NASDAQ:CNMD) is the most popular stock in this table. On the other hand Guangshen Railway Co. Ltd (NYSE:GSH) is the least popular one with only 1 bullish hedge fund positions. The Goodyear Tire & Rubber Company (NASDAQ:GT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GT is 49.9. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 24.8% in 2020 through the end of September and beat the market by 19.3 percentage points. Unfortunately GT wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on GT were disappointed as the stock returned -14.3% in Q3 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.
