Maybe the "smart money" is smart after all.

Given the costly


recall, you might figure tire titan

Goodyear Tire & Rubber

(GT) - Get Goodyear Tire & Rubber Company Report

would inevitably see a significant increase in demand for its tires, and you'd be right.

Unfortunately, steep oil costs and the sagging euro are going to more than offset that new business, reducing the firm's projected third- and fourth-quarter earnings, the company

announced today. If you own the stock, that's the bad news, but if you're a mutual fund investor, you can probably relax because most fund managers stayed away from the stock, down $2.88, or 13.7%, to close at $18.13 Thursday.

On Jan. 1, 167 U.S. stock funds owned Goodyear shares, which were down more than 25% for the year before today. At the end of August the number of domestic stock funds holding the stock dropped to 143.

Goodyear has underperformed the market
for much of the past few years.

Source: Morningstar. Performance through Sept. 20.

"They have taken some market share from their competitors, and the market did give the stock a brief pop after the Bridgestone/Firestone issues surfaced," says Corey McElveen, the stock analyst at


who covers Goodyear. "I think people understood the company wouldn't benefit enough from the shift in market share to offset these other problems."

The stock rose more than 16% in August, but tumbled 10.4% this month, before today's trading.

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S&P 500 index funds like

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Vanguard 500 Index have a Goodyear position, less than a handful of little-known funds have more than 1% of their assets invested in the stock.

McElveen says that beyond the current Bridgestone/Firestone debacle, Goodyear's long-term goal is to cut costs while expanding its market share overseas and in the lucrative replacement tire market. Until investors can discern the company's success in those efforts, he recommends a "wait and see approach."

That seems to be the tack many pros have taken. In the second quarter, 30 institutional investors sold their Goodyear positions completely, compared with 28 investment firms starting positions, according to

, a Web site that tracks institutional ownership.

Still, with a modest 12.9

price-to-earnings ratio, compared with 26.3 for the S&P 500, the company doesn't seem like a huge risk if you like the slow-growing tire biz.


has upped its stake, according to the most recent portfolio data available. It was the biggest institutional buyer in the second quarter, raising its firmwide Goodyear position from just over 158,000 shares to nearly 5 million, owning 3.2% of the firm.

(AWSHX) - Get American Funds Wash Mutual A Report

Washington Mutual Investors, a large-cap value fund run by quiet giant

American Funds

, bought some 3.8 million shares in the second quarter according to Morningstar -- more than any other mutual fund. The $44.5 billion, broker-sold fund is the fifth-largest in the nation. At the end of June, the fund owned 2.4% of the company, but that was less than 0.2% of the fund's assets.