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Should You Buy Titan International Inc (TWI)?

Based on the fact that hedge funds have collectively under-performed the market for several years, it would be easy to assume that their stock picks simply aren’t very good. However, our research shows this not to be the case. In fact, when it comes to their very top picks collectively, they show a strong ability to pick winning stocks. This year hedge funds’ top 30 stock picks easily bested the broader market, at 6.7% compared to 2.6%, despite there being a few duds in there like Facebook (even their collective wisdom isn’t perfect). The results show that there is plenty of merit to imitating the collective wisdom of top investors.

Titan International Inc (NYSE:TWI) was in 13 hedge funds’ portfolios at the end of the third quarter of 2018. TWI has experienced an increase in support from the world’s most elite money managers lately. There were 12 hedge funds in our database with TWI positions at the end of the previous quarter. Our calculations also showed that TWI isn’t among the 30 most popular stocks among hedge funds.

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 has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Mark Rachesky MHR

Let’s go over the fresh hedge fund action encompassing Titan International Inc (NYSE:TWI).

What does the smart money think about Titan International Inc (NYSE:TWI)?

At Q3’s end, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in TWI over the last 13 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

TWI_dec2018

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Mark Rachesky’s MHR Fund Management has the most valuable position in Titan International Inc (NYSE:TWI), worth close to $59.4 million, amounting to 3.2% of its total 13F portfolio. The second most bullish fund manager is Jim Simons of Renaissance Technologies, with a $21 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism include Chuck Royce’s Royce & Associates, Robert Hockett’s Covalent Capital Partners and Israel Englander’s Millennium Management.

With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Point72 Asset Management, managed by Steve Cohen, established the most outsized position in Titan International Inc (NYSE:TWI). Point72 Asset Management had $0.1 million invested in the company at the end of the quarter.

Let’s also examine hedge fund activity in other stocks similar to Titan International Inc (NYSE:TWI). We will take a look at Lumber Liquidators Holdings Inc (NYSE:LL), MFS Intermediate Income Trust (NYSE:MIN), A10 Networks Inc (NYSE:ATEN), and CAI International Inc (NYSE:CAI). This group of stocks’ market values are similar to TWI’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LL 12 26005 0
MIN 2 2236 -1
ATEN 15 57328 2
CAI 15 104050 1
Average 11 47405 0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $47 million. That figure was $90 million in TWI’s case. A10 Networks Inc (NYSE:ATEN) is the most popular stock in this table. On the other hand MFS Intermediate Income Trust (NYSE:MIN) 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard ATEN might be a better candidate to consider a long position.

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

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