Here is What Hedge Funds Think About Titan International Inc (TWI)

It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Titan International Inc (NYSE:TWI).

Is Titan International Inc (NYSE:TWI) going to take off soon? The smart money is surely in a bullish mood. The number of long hedge fund positions that are disclosed in regulatory 13F filings moved up by 2 recently. TWI was in 15 hedge funds’ portfolios at the end of the third quarter of 2016. There were 13 hedge funds in our database with TWI holdings 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 ConnectOne Bancorp Inc (NASDAQ:CNOB), Ellington Financial LLC (NYSE:EFC), and Par Pacific Holdings, Inc. (NYSEMKT:PARR) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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How are hedge funds trading Titan International Inc (NYSE:TWI)?

Heading into the fourth quarter of 2016, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, an increase of 15% from the previous quarter. The graph below displays the number of hedge funds with bullish position in TWI over the last 5 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Mark Rachesky’s MHR Fund Management has the most valuable position in Titan International Inc (NYSE:TWI), worth close to $81 million, corresponding to 5.7% of its total 13F portfolio. On MHR Fund Management’s heels is Renaissance Technologies, one of the largest hedge funds in the world, with a $24.4 million position. Remaining professional money managers that hold long positions comprise D. E. Shaw’s D E Shaw, Richard Driehaus’ Driehaus Capital and Israel Englander’s Millennium Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

As one would reasonably expect, specific money managers were leading the bulls’ herd. Driehaus Capital assembled the most valuable position in Titan International Inc (NYSE:TWI) which had $2.8 million invested in the company at the end of the quarter. Millennium Management also initiated a $2.1 million position during the quarter. The other funds with brand new TWI positions are Chuck Royce’s Royce & Associates, and Ken Griffin’s Citadel Investment Group.

Let’s now review hedge fund activity in other stocks similar to Titan International Inc (NYSE:TWI). These stocks are ConnectOne Bancorp Inc (NASDAQ:CNOB), Ellington Financial LLC (NYSE:EFC), Par Pacific Holdings, Inc. (NYSEMKT:PARR), and MarineMax, Inc. (NYSE:HZO). This group of stocks’ market valuations are similar to TWI’s market valuation.

As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $70 million. That figure was $123 million in TWI’s case. MarineMax, Inc. (NYSE:HZO) is the most popular stock in this table. On the other hand Ellington Financial LLC (NYSE:EFC) is the least popular one with only 3 bullish hedge fund positions. Titan International Inc (NYSE:TWI) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard HZO might be a better candidate to consider taking a long position in.

Disclosure: None