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Small-Cap-Oriented Hedge Fund Raises Its Stake in Standard Motor Products, Inc. (SMP)

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Despite the fact that passive investors, do not benefit from the same level of coverage as their activist peers, their moves should also be watched closely, and one of the best ways to get a fresh glimpse at the recent plays of a passive hedge fund manager is to track their 13G fillings with the SEC. Chuck Royce’s hedge fund, Royce & Associates, recently disclosed in a 13G filing ownership of about 2.4 million shares of Standard Motor Products, Inc. (NYSE:SMP). At the current price of the company’s stock the value of the Royce & Associates’ stake in Standard Motor Products, Inc. (NYSE:SMP) amounts to about $74.1 million. Chuck Royce is bullish on Standard Motor Products, with the recent 13F filings showing that the hedge fund has been increasing its stake in the company.

Chuck Royce

If you were to ask many of your fellow readers, hedge funds are seen as delayed, outdated investment vehicles of a period lost to current times. Although there are In excess of 8,000 hedge funds trading today, Insider Monkey focuses on the top tier of this club, about 525 funds. Analysts calculate that this group controls most of the smart money’s total assets, and by monitoring their best stock picks, we’ve determined a number of investment strategies that have historically outperformed the S&P 500. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 33 percentage points in 11 months (find the details here).

Equally as crucial, bullish insider trading activity is a second way to analyze the marketplace. Just as you’d expect, there are a number of stimuli for a corporate insider to sell shares of his or her company, but just one, very obvious reason why they would buy. Many academic studies have demonstrated the impressive potential of this strategy if shareholders know where to look (learn more here).

What’s more, we’re going to discuss the recent info surrounding Standard Motor Products, Inc. (NYSE:SMP).

What does the smart money think about Standard Motor Products, Inc. (NYSE:SMP)?

Heading into Q3, a total of 12 of the hedge funds we track were long in this stock, a change of 0% from one quarter earlier. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were increasing their holdings considerably.

According to our 13F database, Royce & Associates, holds the largest position in Standard Motor Products, Inc. (NYSE:SMP). The second largest stake is held by Cliff Asness of AQR Capital Management, with a $14.8 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining hedgies that hold long positions include Mario Gabelli’s GAMCO Investors, Jim Simons’s Renaissance Technologies and Peter Algert and Kevin Coldiron’s Algert Coldiron Investors.

As Standard Motor Products, Inc. (NYSE:SMP) has faced bearish sentiment from the entirety of the hedge funds we track, logic holds that there is a sect of hedgies that slashed their full holdings heading into Q2. Intriguingly, Neil Chriss’s Hutchin Hill Capital sold off the largest investment of the 450+ funds we key on, totaling close to $1.1 million in stock, and Joel Greenblatt of Gotham Asset Management was right behind this move, as the fund cut about $0.2 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

What have insiders been doing with Standard Motor Products, Inc. (NYSE:SMP)?

Legal insider trading, particularly when it’s bullish, is particularly usable when the primary stock in question has experienced transactions within the past six months. Over the last half-year time period, Standard Motor Products, Inc. (NYSE:SMP) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll also review the relationship between both of these indicators in other stocks similar to Standard Motor Products, Inc. (NYSE:SMP). These stocks are Meritor Inc (NYSE:MTOR), Superior Industries International Inc. (NYSE:SUP), Gentherm Inc (NASDAQ:THRM), Remy International Inc (NASDAQ:REMY), and Federal-Mogul Corporation (NASDAQ:FDML). All of these stocks are in the auto parts industry and their market caps match SMP’s market cap.

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