The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards The Goodyear Tire & Rubber Company (NASDAQ:GT).
Is The Goodyear Tire & Rubber Company (NASDAQ:GT) a buy right now? Investors who are in the know are becoming less confident. The number of long hedge fund bets shrunk by 6 lately. Our calculations also showed that GT isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a look at the recent hedge fund action regarding The Goodyear Tire & Rubber Company (NASDAQ:GT).
What does smart money think about The Goodyear Tire & Rubber Company (NASDAQ:GT)?
At the end of the first quarter, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -19% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in GT over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, D E Shaw was the largest shareholder of The Goodyear Tire & Rubber Company (NASDAQ:GT), with a stake worth $33.3 million reported as of the end of September. Trailing D E Shaw was Arrowstreet Capital, which amassed a stake valued at $23.9 million. Appaloosa Management LP, Millennium Management, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Appaloosa Management LP allocated the biggest weight to The Goodyear Tire & Rubber Company (NASDAQ:GT), around 0.6% of its 13F portfolio. Ellington is also relatively very bullish on the stock, designating 0.13 percent of its 13F equity portfolio to GT.
Seeing as The Goodyear Tire & Rubber Company (NASDAQ:GT) has witnessed declining sentiment from hedge fund managers, logic holds that there exists a select few funds who sold off their positions entirely last quarter. It’s worth mentioning that Mike Masters’s Masters Capital Management dropped the largest stake of the “upper crust” of funds watched by Insider Monkey, comprising an estimated $14.9 million in stock, and Donald Sussman’s Paloma Partners was right behind this move, as the fund dropped about $3.3 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 6 funds last quarter.
Let’s check out hedge fund activity in other stocks similar to The Goodyear Tire & Rubber Company (NASDAQ:GT). We will take a look at Embraer SA (NYSE:ERJ), Itau Corpbanca (NYSE:ITCB), Zogenix, Inc. (NASDAQ:ZGNX), and AMC Networks Inc (NASDAQ:AMCX). This group of stocks’ market valuations are similar to GT’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $221 million. That figure was $130 million in GT’s case. Zogenix, Inc. (NASDAQ:ZGNX) is the most popular stock in this table. On the other hand Itau Corpbanca (NYSE:ITCB) is the least popular one with only 1 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 calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on GT as the stock returned 30.8% in Q2 (through the end of May) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.