We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Ackman’s recent Valeant losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards The Goodyear Tire & Rubber Company (NASDAQ:GT).
The Goodyear Tire & Rubber Company (NASDAQ:GT) has experienced a decrease in hedge fund sentiment recently. GT was in 36 hedge funds’ portfolios at the end of the third quarter of 2015. There were 42 hedge funds in our database with GT positions at the end of the previous quarter. 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 Mettler-Toledo International Inc. (NYSE:MTD), KLA-Tencor Corporation (NASDAQ:KLAC), and Interpublic Group of Companies Inc (NYSE:IPG) to gather more data points.
Follow Goodyear Tire & Rubber Co (NASDAQ:GT)
Follow Goodyear Tire & Rubber Co (NASDAQ:GT)
To the average investor there are a multitude of formulas shareholders use to analyze their stock investments. Two of the most useful formulas are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the best picks of the elite investment managers can beat the S&P 500 by a significant margin (see the details here).
With all of this in mind, we’re going to analyze the recent action encompassing The Goodyear Tire & Rubber Company (NASDAQ:GT).
How have hedgies been trading The Goodyear Tire & Rubber Company (NASDAQ:GT)?
At the end of the third quarter, a total of 36 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from the second quarter. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Richard McGuire’s Marcato Capital Management has the biggest position in The Goodyear Tire & Rubber Company (NASDAQ:GT), worth close to $301.4 million, comprising 15.1% of its total 13F portfolio. The second largest stake is held by Adage Capital Management, managed by Phill Gross and Robert Atchinson, which holds an $208.9 million position; the fund has 0.6% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish encompass David Tepper’s Appaloosa Management LP, Alexander Roepers’s Atlantic Investment Management and Ken Griffin’s Citadel Investment Group.
Judging by the fact that The Goodyear Tire & Rubber Company (NASDAQ:GT) has faced falling interest from the smart money, logic holds that there were a few hedgies who sold off their full holdings last quarter. Interestingly, Jim Simons’s Renaissance Technologies sold off the biggest position of the 700 funds followed by Insider Monkey, worth an estimated $8.2 million in stock, and Colin Hall and James Davidson’s Long Oar Global Investors was right behind this move, as the fund said goodbye to about $4.5 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 6 funds last quarter.
Let’s check out hedge fund activity in other stocks similar to The Goodyear Tire & Rubber Company (NASDAQ:GT). These stocks are Mettler-Toledo International Inc. (NYSE:MTD), KLA-Tencor Corporation (NASDAQ:KLAC), Interpublic Group of Companies Inc (NYSE:IPG), and Fitbit Inc (NYSE:FIT). This group of stocks’ market caps resemble GT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MTD | 21 | 360217 | 10 |
| KLAC | 28 | 256410 | 4 |
| IPG | 36 | 2103222 | -5 |
| FIT | 20 | 186790 | -7 |
As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $727 million. That figure was $1.71 million in GT’s case. Interpublic Group of Companies Inc (NYSE:IPG) is the most popular stock in this table, while Fitbit Inc (NYSE:FIT) is the least popular one with only 20 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. However, the funds we track have amassed $1.71 billion worth of GT’s stock. This is a slightly positive signal, and the stock might represent a good investment, although we’d rather spend our time researching stocks that hedge funds are piling on such as IPG.
