Titan International Inc (TWI): Are Hedge Funds Right About This Stock?

It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The Standard and Poor’s 500 Total Return Index ETFs returned approximately 27.5% in 2019 (through the end of November). Conversely, hedge funds’ top 20 large-cap stock picks generated a return of 37.4% during the same 11-month period, with the majority of these stock picks outperforming the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering the last 18 years indicates that hedge funds’ consensus stock picks generate superior risk-adjusted returns. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Titan International Inc (NYSE:TWI).

Is Titan International Inc (NYSE:TWI) worth your attention right now? Hedge funds are getting less bullish. The number of long hedge fund bets decreased by 1 in recent months. 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 below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Today there are many methods market participants have at their disposal to assess their stock investments. Some of the most innovative methods are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the top picks of the elite money managers can outperform the S&P 500 by a solid margin (see the details here).

Mark Rachesky MHR

Mark Rachesky of MHR Fund Management

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a peek at the recent hedge fund action surrounding Titan International Inc (NYSE:TWI).

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

At Q3’s end, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -10% from the previous quarter. On the other hand, there were a total of 13 hedge funds with a bullish position in TWI a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is TWI A Good Stock To Buy?

The largest stake in Titan International Inc (NYSE:TWI) was held by MHR Fund Management, which reported holding $21.6 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $9 million position. Other investors bullish on the company included Rutabaga Capital Management, D E Shaw, and Royce & Associates. In terms of the portfolio weights assigned to each position Rutabaga Capital Management allocated the biggest weight to Titan International Inc (NYSE:TWI), around 2.34% of its 13F portfolio. MHR Fund Management is also relatively very bullish on the stock, designating 1.83 percent of its 13F equity portfolio to TWI.

Due to the fact that Titan International Inc (NYSE:TWI) has witnessed falling interest from the entirety of the hedge funds we track, it’s safe to say that there is a sect of fund managers who sold off their full holdings by the end of the third quarter. At the top of the heap, Steve Cohen’s Point72 Asset Management said goodbye to the biggest stake of the 750 funds monitored by Insider Monkey, totaling an estimated $4.9 million in stock, and Donald Sussman’s Paloma Partners was right behind this move, as the fund cut about $0.3 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 1 funds by the end of the third quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Titan International Inc (NYSE:TWI). These stocks are Tile Shop Hldgs, Inc. (NASDAQ:TTS), Thompson Creek Metals Company Inc (NYSE:TC), Daseke, Inc. (NASDAQ:DSKE), and Acasti Pharma Inc. (NASDAQ:ACST). This group of stocks’ market values resemble TWI’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TTS 10 7226 -2
TC 1 34 -1
DSKE 5 1251 -2
ACST 6 5198 4
Average 5.5 3427 -0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 5.5 hedge funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $41 million in TWI’s case. Tile Shop Hldgs, Inc. (NASDAQ:TTS) is the most popular stock in this table. On the other hand Thompson Creek Metals Company Inc (NYSE:TC) is the least popular one with only 1 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 calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on TWI, though not to the same extent, as the stock returned 8.5% during the first two months of the fourth quarter and outperformed the market as well.

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