The financial regulations require hedge funds and wealthy investors that crossed the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on June 28th. We at Insider Monkey have made an extensive database of nearly 750 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Motorcar Parts of America, Inc. (NASDAQ:MPAA) based on those filings.
Motorcar Parts of America, Inc. (NASDAQ:MPAA) was in 13 hedge funds’ portfolios at the end of June. MPAA investors should pay attention to an increase in hedge fund sentiment lately. There were 9 hedge funds in our database with MPAA holdings at the end of the previous quarter. Our calculations also showed that MPAA isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Unlike other investors who track every movement of the 25 largest hedge funds, our long-short investment strategy relies on hedge fund buy/sell signals given by the 100 best performing hedge funds. We’re going to view the fresh hedge fund action surrounding Motorcar Parts of America, Inc. (NASDAQ:MPAA).
How are hedge funds trading Motorcar Parts of America, Inc. (NASDAQ:MPAA)?
At the end of the second quarter, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 44% from one quarter earlier. By comparison, 8 hedge funds held shares or bullish call options in MPAA a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
More specifically, Private Capital Management was the largest shareholder of Motorcar Parts of America, Inc. (NASDAQ:MPAA), with a stake worth $35.1 million reported as of the end of March. Trailing Private Capital Management was Fine Capital Partners, which amassed a stake valued at $21 million. Pzena Investment Management, Rutabaga Capital Management, and Royce & Associates were also very fond of the stock, giving the stock large weights in their portfolios.
Now, key hedge funds have jumped into Motorcar Parts of America, Inc. (NASDAQ:MPAA) headfirst. D E Shaw, managed by D. E. Shaw, established the biggest position in Motorcar Parts of America, Inc. (NASDAQ:MPAA). D E Shaw had $0.9 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also made a $0.6 million investment in the stock during the quarter. The following funds were also among the new MPAA investors: Matthew Hulsizer’s PEAK6 Capital Management, Renaissance Technologies, and Michael Gelband’s ExodusPoint Capital.
Let’s now take a look at hedge fund activity in other stocks similar to Motorcar Parts of America, Inc. (NASDAQ:MPAA). We will take a look at CalAmp Corp. (NASDAQ:CAMP), Gogo Inc (NASDAQ:GOGO), Southern National Bancorp of Virginia, Inc. (NASDAQ:SONA), and P.A.M. Transportation Services, Inc. (NASDAQ:PTSI). This group of stocks’ market values are similar to MPAA’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CAMP | 16 | 99878 | 1 |
| GOGO | 15 | 65503 | 3 |
| SONA | 7 | 21014 | -1 |
| PTSI | 1 | 24550 | -1 |
| Average | 9.75 | 52736 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.75 hedge funds with bullish positions and the average amount invested in these stocks was $53 million. That figure was $94 million in MPAA’s case. CalAmp Corp. (NASDAQ:CAMP) is the most popular stock in this table. On the other hand P.A.M. Transportation Services, Inc. (NASDAQ:PTSI) is the least popular one with only 1 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 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 -21.1% during the third quarter 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
