Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Titan International Inc (NYSE:TWI).
Is TWI a good stock to buy now? Hedge fund interest in Titan International Inc (NYSE:TWI) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that TWI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). At the end of this article we will also compare TWI to other stocks including NeuBase Therapeutics, Inc. (NASDAQ:NBSE), Precision Drilling Corp (NYSE:PDS), and Carter Bankshares, Inc. (NASDAQ:CARE) to get a better sense of its popularity.
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 66 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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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. Keeping this in mind we’re going to take a glance at the new hedge fund action surrounding Titan International Inc (NYSE:TWI).
Do Hedge Funds Think TWI Is A Good Stock To Buy Now?
At the end of September, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in TWI over the last 21 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, MHR Fund Management was the largest shareholder of Titan International Inc (NYSE:TWI), with a stake worth $23.1 million reported as of the end of September. Trailing MHR Fund Management was Renaissance Technologies, which amassed a stake valued at $11.1 million. D E Shaw, Royce & Associates, and Invenomic Capital Management 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 MHR Fund Management allocated the biggest weight to Titan International Inc (NYSE:TWI), around 1.84% of its 13F portfolio. Invenomic Capital Management is also relatively very bullish on the stock, setting aside 0.25 percent of its 13F equity portfolio to TWI.
Judging by the fact that Titan International Inc (NYSE:TWI) has experienced falling interest from the entirety of the hedge funds we track, it’s easy to see that there were a few hedgies that decided to sell off their entire stakes last quarter. It’s worth mentioning that Donald Sussman’s Paloma Partners dumped the biggest investment of all the hedgies watched by Insider Monkey, valued at close to $0.2 million in stock, and Paul Tudor Jones’s Tudor Investment Corp was right behind this move, as the fund said goodbye to about $0.1 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now review hedge fund activity in other stocks similar to Titan International Inc (NYSE:TWI). We will take a look at NeuBase Therapeutics, Inc. (NASDAQ:NBSE), Precision Drilling Corp (NYSE:PDS), Carter Bankshares, Inc. (NASDAQ:CARE), Scorpio Bulkers Inc (NYSE:SALT), TD Holdings, Inc. (NASDAQ:GLG), PowerFleet, Inc. (NASDAQ:PWFL), and Select Interior Concepts, Inc. (NASDAQ:SIC). This group of stocks’ market caps match TWI’s market cap.
|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 7.9 hedge funds with bullish positions and the average amount invested in these stocks was $16 million. That figure was $38 million in TWI’s case. Select Interior Concepts, Inc. (NASDAQ:SIC) is the most popular stock in this table. On the other hand Scorpio Bulkers Inc (NYSE:SALT) is the least popular one with only 2 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. Our overall hedge fund sentiment score for TWI is 62.2. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on TWI as the stock returned 82.4% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.