With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter of 2021. One of these stocks was The Goodyear Tire & Rubber Company (NASDAQ:GT).
The Goodyear Tire & Rubber Company (NASDAQ:GT) investors should pay attention to a decrease in hedge fund interest lately. The Goodyear Tire & Rubber Company (NASDAQ:GT) was in 23 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 38. There were 27 hedge funds in our database with GT holdings at the end of December. Our calculations also showed that GT isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Ray Dalio of Bridgewater Associates
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind we’re going to take a look at the key hedge fund action regarding The Goodyear Tire & Rubber Company (NASDAQ:GT).
Do Hedge Funds Think GT Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of -15% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards GT over the last 23 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, D E Shaw held the most valuable stake in The Goodyear Tire & Rubber Company (NASDAQ:GT), which was worth $92.2 million at the end of the fourth quarter. On the second spot was Arrowstreet Capital which amassed $81.7 million worth of shares. Appaloosa Management LP, Adage Capital Management, and Millennium 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 Albar Capital allocated the biggest weight to The Goodyear Tire & Rubber Company (NASDAQ:GT), around 3.09% of its 13F portfolio. Appaloosa Management LP is also relatively very bullish on the stock, designating 1.17 percent of its 13F equity portfolio to GT.
Since The Goodyear Tire & Rubber Company (NASDAQ:GT) has experienced falling interest from the aggregate hedge fund industry, we can see that there was a specific group of hedgies that slashed their full holdings by the end of the first quarter. Interestingly, Dmitry Balyasny’s Balyasny Asset Management cut the biggest position of the 750 funds monitored by Insider Monkey, worth close to $6.9 million in stock. Louis Bacon’s fund, Moore Global Investments, also cut its stock, about $4.4 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 4 funds by the end of the first quarter.
Let’s go over hedge fund activity in other stocks similar to The Goodyear Tire & Rubber Company (NASDAQ:GT). These stocks are Pacific Premier Bancorp, Inc. (NASDAQ:PPBI), Hudson Pacific Properties Inc (NYSE:HPP), ONE Gas Inc (NYSE:OGS), Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC), JFrog Ltd. (NASDAQ:FROG), Covetrus, Inc. (NASDAQ:CVET), and BankUnited Inc (NYSE:BKU). This group of stocks’ market caps are similar to GT’s market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PPBI,10,139882,0 HPP,16,105147,-6 OGS,13,28456,1 TKC,8,28943,4 FROG,20,235381,4 CVET,17,143072,-2 BKU,9,135009,-2 Average,13.3,116556,-0.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.3 hedge funds with bullish positions and the average amount invested in these stocks was $117 million. That figure was $430 million in GT’s case. JFrog Ltd. (NASDAQ:FROG) is the most popular stock in this table. On the other hand Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks The Goodyear Tire & Rubber Company (NASDAQ:GT) is more popular among hedge funds. Our overall hedge fund sentiment score for GT is 69.2. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and still beat the market by 7.7 percentage points. Unfortunately GT wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on GT were disappointed as the stock returned -11.3% since the end of the first quarter (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.