Is GT Stock A Buy or Sell?

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of The Goodyear Tire & Rubber Company (NASDAQ:GT).

Is GT stock a buy? Hedge funds were getting more bullish. The number of bullish hedge fund bets improved by 3 recently. The Goodyear Tire & Rubber Company (NASDAQ:GT) was in 27 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 38. Our calculations also showed that GT isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).

David Tepper of Appaloosa Management LP

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. 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. With all of this in mind we’re going to take a look at the fresh hedge fund action regarding The Goodyear Tire & Rubber Company (NASDAQ:GT).

Do Hedge Funds Think GT Is A Good Stock To Buy Now?

Heading into the first quarter of 2021, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of 13% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in GT over the last 22 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

The largest stake in The Goodyear Tire & Rubber Company (NASDAQ:GT) was held by D E Shaw, which reported holding $64 million worth of stock at the end of December. It was followed by Appaloosa Management LP with a $48.6 million position. Other investors bullish on the company included Arrowstreet Capital, Millennium Management, and AQR Capital Management. In terms of the portfolio weights assigned to each position Jade Capital Advisors allocated the biggest weight to The Goodyear Tire & Rubber Company (NASDAQ:GT), around 1.93% of its 13F portfolio. Appaloosa Management LP is also relatively very bullish on the stock, designating 0.73 percent of its 13F equity portfolio to GT.

Now, specific money managers were breaking ground themselves. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the largest position in The Goodyear Tire & Rubber Company (NASDAQ:GT). Balyasny Asset Management had $6.9 million invested in the company at the end of the quarter. Louis Bacon’s Moore Global Investments also made a $4.4 million investment in the stock during the quarter. The other funds with brand new GT positions are Peter Muller’s PDT Partners, Robert Vincent McHugh’s Jade Capital Advisors, and Renaissance Technologies.

Let’s now review hedge fund activity in other stocks similar to The Goodyear Tire & Rubber Company (NASDAQ:GT). We will take a look at Cabot Corporation (NYSE:CBT), Oi SA (NYSE:OIBR), Madison Square Garden Entertainment Corp. (NYSE:MSGE), Kennedy-Wilson Holdings Inc (NYSE:KW), MGE Energy, Inc. (NASDAQ:MGEE), SINA Corp (NASDAQ:SINA), and ABM Industries, Inc. (NYSE:ABM). This group of stocks’ market valuations match GT’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.6 hedge funds with bullish positions and the average amount invested in these stocks was $250 million. That figure was $217 million in GT’s case. Madison Square Garden Entertainment Corp. (NYSE:MSGE) is the most popular stock in this table. On the other hand Oi SA (NYSE:OIBR) is the least popular one with only 3 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 79.3. 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. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Hedge funds were also right about betting on GT as the stock returned 64.3% since the end of Q4 (through 4/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Disclosure: None. This article was originally published at Insider Monkey.