The Goodyear Company (NYSE:GT) appears to be a compelling value play for at least two hedge funds that has quickly amassed a sizable stake in the tire and rubber company. TPG-Axon Capital quickly acquired shares to become the company’s second largest shareholder in about one quarter. Meanwhile, Eton Park Capital Management – the company’s largest shareholder – added 11.3 million shares to their stake. Investors may want to pay attention because both of these hedge funds are value funds!

TPG-Axon and Eton Park are both strong value funds and Goodyear fits perfectly into their portfolios. The company has strong financials and management along with good cash-flow generation. Meanwhile, the company’s cost reduction program may have been the catalyst needed to make it a compelling buy right now. Goodyear currently sits very near its 52-week low despite reporting strong third quarter earnings in October. The stock has fallen over 22% in the last three months based simply on economic fears and a decline in the U.S. Tire Index.

The purchase by TPG-Axon is a very positive sign for Goodyear shareholders. The company may be trading near its 52-week low, but the current valuation is likely unjustified and simply due to larger economic returns that are being blown out of proportion. The involvement of these two hedge funds could give investors the confidence they need to re-enter this stock and help it return to its true valuation. Combined, these factors make GT a stock worth watching closely over the next few months!

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