Motorcar Parts of America, Inc. (NASDAQ:MPAA) has seen a decrease in activity from the world’s largest hedge funds in recent months.
If you’d ask most stock holders, hedge funds are assumed to be underperforming, old investment tools of years past. While there are more than 8000 funds in operation at the moment, we at Insider Monkey choose to focus on the upper echelon of this club, around 450 funds. It is widely believed that this group has its hands on most of the hedge fund industry’s total asset base, and by tracking their highest performing equity investments, we have figured out a few investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).
Just as important, optimistic insider trading activity is another way to parse down the world of equities. Obviously, there are plenty of incentives for a bullish insider to downsize shares of his or her company, but only one, very simple reason why they would initiate a purchase. Various empirical studies have demonstrated the useful potential of this strategy if “monkeys” know where to look (learn more here).
With these “truths” under our belt, it’s important to take a gander at the recent action encompassing Motorcar Parts of America, Inc. (NASDAQ:MPAA).
What have hedge funds been doing with Motorcar Parts of America, Inc. (NASDAQ:MPAA)?
At year’s end, a total of 5 of the hedge funds we track were bullish in this stock, a change of 0% from the third quarter. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their stakes substantially.
Of the funds we track, Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management had the biggest position in Motorcar Parts of America, Inc. (NASDAQ:MPAA), worth close to $6.4 million, comprising 1% of its total 13F portfolio. The second largest stake is held by Phil Frohlich of Prescott Group Capital Management, with a $4.6 million position; the fund has 1.2% of its 13F portfolio invested in the stock. Some other peers that are bullish include Andy Redleaf’s Whitebox Advisors, Sander Gerber’s Hudson Bay Capital Management and Jim Simons’s Renaissance Technologies.
Seeing as Motorcar Parts of America, Inc. (NASDAQ:MPAA) has faced falling interest from hedge fund managers, it’s safe to say that there exists a select few fund managers who sold off their positions entirely in Q4. It’s worth mentioning that Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners dumped the biggest stake of the 450+ funds we key on, valued at about $0.1 million in stock.. John Overdeck and David Siegel’s fund, Two Sigma Advisors, also cut its stock, about $0.1 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
What do corporate executives and insiders think about Motorcar Parts of America, Inc. (NASDAQ:MPAA)?
Bullish insider trading is best served when the company in focus has experienced transactions within the past 180 days. Over the last half-year time period, Motorcar Parts of America, Inc. (NASDAQ:MPAA) has seen 1 unique insiders buying, and 1 insider sales (see the details of insider trades here).
Let’s also take a look at hedge fund and insider activity in other stocks similar to Motorcar Parts of America, Inc. (NASDAQ:MPAA). These stocks are China Zenix Auto International Ltd (NYSE:ZX), Shiloh Industries, Inc. (NASDAQ:SHLO), Miller Industries, Inc. (NYSE:MLR), China Automotive Systems, Inc. (NASDAQ:CAAS), and Strattec Security Corp. (NASDAQ:STRT). This group of stocks are the members of the auto parts industry and their market caps resemble MPAA’s market cap.