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The Goodyear Tire & Rubber Company (GT): Are Hedge Funds Right About This Stock?

Nina Todic

The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the second quarter, which unveil their equity positions as of June 28. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards The Goodyear Tire & Rubber Company (NASDAQ:GT).

Is The Goodyear Tire & Rubber Company (NASDAQ:GT) going to take off soon? Money managers are in a bullish mood. The number of bullish hedge fund bets went up by 11 recently. Our calculations also showed that GT isn't among the 30 most popular stocks among hedge funds (see the video below). GT was in 30 hedge funds' portfolios at the end of June. There were 19 hedge funds in our database with GT holdings at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Phill Gross, Adage Capital Management

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's take a gander at the fresh hedge fund action regarding The Goodyear Tire & Rubber Company (NASDAQ:GT).

How are hedge funds trading The Goodyear Tire & Rubber Company (NASDAQ:GT)?

Heading into the third quarter of 2019, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 58% from the first quarter of 2019. The graph below displays the number of hedge funds with bullish position in GT over the last 16 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with GT Positions

Among these funds, D E Shaw held the most valuable stake in The Goodyear Tire & Rubber Company (NASDAQ:GT), which was worth $123.6 million at the end of the second quarter. On the second spot was Arrowstreet Capital which amassed $91.5 million worth of shares. Moreover, Adage Capital Management, Citadel Investment Group, and Millennium Management were also bullish on The Goodyear Tire & Rubber Company (NASDAQ:GT), allocating a large percentage of their portfolios to this stock.

With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the biggest position in The Goodyear Tire & Rubber Company (NASDAQ:GT). Marshall Wace LLP had $7 million invested in the company at the end of the quarter. Dmitry Balyasny's Balyasny Asset Management also made a $2.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners, David Costen Haley's HBK Investments, and Benjamin A. Smith's Laurion Capital Management.

Let's also examine hedge fund activity in other stocks similar to The Goodyear Tire & Rubber Company (NASDAQ:GT). These stocks are Wright Medical Group N.V. (NASDAQ:WMGI), Silgan Holdings Inc. (NASDAQ:SLGN), Two Harbors Investment Corp (NYSE:TWO), and Qualys Inc (NASDAQ:QLYS). This group of stocks' market caps resemble GT's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WMGI,34,718534,-1 SLGN,18,210598,3 TWO,13,41880,-5 QLYS,17,134679,3 Average,20.5,276423,0 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.5 hedge funds with bullish positions and the average amount invested in these stocks was $276 million. That figure was $425 million in GT's case. Wright Medical Group N.V. (NASDAQ:WMGI) is the most popular stock in this table. On the other hand Two Harbors Investment Corp (NYSE:TWO) is the least popular one with only 13 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. 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 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately GT wasn't nearly as popular as these 20 stocks and hedge funds that were betting on GT were disappointed as the stock returned -4.7% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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

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