Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Amazon, Facebook and Alibaba, have not done well in Q4 due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average over the long-term. The top 20 stocks among hedge funds beat the S&P 500 Index ETF by more than 6 percentage points so far this year. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Motorcar Parts of America, Inc. (NASDAQ:MPAA) from the perspective of those elite funds.
Is Motorcar Parts of America, Inc. (NASDAQ:MPAA) a bargain? Hedge funds are taking a bearish view. The number of bullish hedge fund bets decreased by 1 lately. Our calculations also showed that mpaa isn’t among the 30 most popular stocks among hedge funds.
In the 21st century investor’s toolkit there are a large number of signals market participants put to use to grade stocks. A pair of the less utilized signals are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the top hedge fund managers can trounce their index-focused peers by a superb amount (see the details here).
We’re going to take a look at the new hedge fund action regarding Motorcar Parts of America, Inc. (NASDAQ:MPAA).
How are hedge funds trading Motorcar Parts of America, Inc. (NASDAQ:MPAA)?
Heading into the second quarter of 2019, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -10% from the fourth quarter of 2018. By comparison, 7 hedge funds held shares or bullish call options in MPAA a year ago. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Private Capital Management, managed by Gregg J. Powers, holds the largest position in Motorcar Parts of America, Inc. (NASDAQ:MPAA). Private Capital Management has a $30.4 million position in the stock, comprising 4.6% of its 13F portfolio. Coming in second is Fine Capital Partners, led by Debra Fine, holding a $26.6 million position; 3.8% of its 13F portfolio is allocated to the stock. Other members of the smart money that hold long positions consist of Peter Schliemann’s Rutabaga Capital Management, Richard S. Pzena’s Pzena Investment Management and Ken Grossman and Glen Schneider’s SG Capital Management.
Due to the fact that Motorcar Parts of America, Inc. (NASDAQ:MPAA) has witnessed a decline in interest from hedge fund managers, we can see that there exists a select few money managers who sold off their positions entirely last quarter. Intriguingly, J. Daniel Plants’s Voce Capital sold off the biggest investment of the “upper crust” of funds tracked by Insider Monkey, comprising about $3.1 million in stock. Bernard Horn’s fund, Polaris Capital Management, also sold off its stock, about $1.8 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds last quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Motorcar Parts of America, Inc. (NASDAQ:MPAA) but similarly valued. These stocks are NI Holdings, Inc. (NASDAQ:NODK), Karyopharm Therapeutics Inc (NASDAQ:KPTI), Jumei International Holding Ltd (NYSE:JMEI), and Dorian LPG Ltd (NYSE:LPG). This group of stocks’ market valuations are similar to MPAA’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 8.25 hedge funds with bullish positions and the average amount invested in these stocks was $52 million. That figure was $94 million in MPAA’s case. Karyopharm Therapeutics Inc (NASDAQ:KPTI) is the most popular stock in this table. On the other hand Jumei International Holding Ltd (NYSE:JMEI) is the least popular one with only 3 bullish hedge fund positions. Motorcar Parts of America, Inc. (NASDAQ:MPAA) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately MPAA wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on MPAA were disappointed as the stock returned -12.5% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.