The Goodyear Tire & Rubber Company (NASDAQ:GT) has seen a decrease in hedge fund sentiment in recent months.
According to most shareholders, hedge funds are viewed as slow, old investment tools of yesteryear. While there are over 8000 funds with their doors open today, we at Insider Monkey look at the top tier of this group, about 450 funds. It is estimated that this group controls the majority of the hedge fund industry’s total capital, and by monitoring their highest performing equity investments, we have deciphered a number of investment strategies that have historically beaten Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).
Equally as integral, positive insider trading sentiment is another way to break down the investments you’re interested in. There are a number of stimuli for an upper level exec to cut shares of his or her company, but just one, very obvious reason why they would buy. Various academic studies have demonstrated the useful potential of this method if shareholders understand what to do (learn more here).
Consequently, let’s take a look at the recent action encompassing The Goodyear Tire & Rubber Company (NASDAQ:GT).
How are hedge funds trading The Goodyear Tire & Rubber Company (NASDAQ:GT)?
Heading into Q2, a total of 30 of the hedge funds we track were long in this stock, a change of -9% from the previous quarter. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were increasing their holdings considerably.
When looking at the hedgies we track, Appaloosa Management LP, managed by David Tepper, holds the largest position in The Goodyear Tire & Rubber Company (NASDAQ:GT). Appaloosa Management LP has a $192.1 million position in the stock, comprising 4.1% of its 13F portfolio. The second largest stake is held by SAC Capital Advisors, managed by Steven Cohen, which held a $108.3 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Remaining hedge funds that are bullish include Robert Pohly’s Samlyn Capital, D. E. Shaw’s D E Shaw and Jim Simons’s Renaissance Technologies.
Judging by the fact that The Goodyear Tire & Rubber Company (NASDAQ:GT) has witnessed a declination in interest from hedge fund managers, it’s safe to say that there were a few hedgies that elected to cut their entire stakes last quarter. At the top of the heap, Bruce Kovner’s Caxton Associates LP dumped the largest investment of all the hedgies we track, totaling about $8.2 million in stock., and Boaz Weinstein of Saba Capital was right behind this move, as the fund dropped about $7 million worth. These transactions are interesting, as total hedge fund interest fell by 3 funds last quarter.
What have insiders been doing with The Goodyear Tire & Rubber Company (NASDAQ:GT)?
Insider trading activity, especially when it’s bullish, is best served when the company we’re looking at has seen transactions within the past 180 days. Over the latest 180-day time frame, The Goodyear Tire & Rubber Company (NASDAQ:GT) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to The Goodyear Tire & Rubber Company (NASDAQ:GT). These stocks are Tredegar Corporation (NYSE:TG), Titan International Inc (NYSE:TWI), Cooper Tire & Rubber Company (NYSE:CTB), Berry Plastics Group Inc (NYSE:BERY), and Carlisle Companies, Inc. (NYSE:CSL). This group of stocks are in the rubber & plastics industry and their market caps resemble GT’s market cap.