Insider Monkey finished processing more than 700 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of December 31st, 2018. In this article we are going to take a look at smart money sentiment towards Standard Motor Products, Inc. (NYSE:SMP).
Standard Motor Products, Inc. (NYSE:SMP) investors should be aware of an increase in enthusiasm from smart money recently. Our calculations also showed that smp isn’t among the 30 most popular stocks among hedge funds.
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 32 percentage points since May 2014 through March 12, 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.
We’re going to take a look at the new hedge fund action surrounding Standard Motor Products, Inc. (NYSE:SMP).
How are hedge funds trading Standard Motor Products, Inc. (NYSE:SMP)?
Heading into the first quarter of 2019, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 10% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SMP over the last 14 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Standard Motor Products, Inc. (NYSE:SMP) was held by Royce & Associates, which reported holding $106.3 million worth of stock at the end of December. It was followed by GAMCO Investors with a $7.4 million position. Other investors bullish on the company included Millennium Management, Citadel Investment Group, and Third Avenue Management.
As industrywide interest jumped, specific money managers were leading the bulls’ herd. Gotham Asset Management, managed by Joel Greenblatt, assembled the biggest position in Standard Motor Products, Inc. (NYSE:SMP). Gotham Asset Management had $0.4 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also initiated a $0.4 million position during the quarter. The only other fund with a brand new SMP position is John Overdeck and David Siegel’s Two Sigma Advisors.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Standard Motor Products, Inc. (NYSE:SMP) but similarly valued. These stocks are PPDAI Group Inc. (NYSE:PPDF), Tortoise Energy Infrastructure Corporation (NYSE:TYG), Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW), and BJ’s Restaurants, Inc. (NASDAQ:BJRI). This group of stocks’ market values are closest to SMP’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PPDF | 6 | 4982 | 1 |
| TYG | 3 | 2890 | 0 |
| AAWW | 19 | 121011 | 4 |
| BJRI | 21 | 145000 | 1 |
| Average | 12.25 | 68471 | 1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $68 million. That figure was $129 million in SMP’s case. BJ’s Restaurants, Inc. (NASDAQ:BJRI) is the most popular stock in this table. On the other hand Tortoise Energy Infrastructure Corporation (NYSE:TYG) is the least popular one with only 3 bullish hedge fund positions. Standard Motor Products, Inc. (NYSE:SMP) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately SMP wasn’t nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); SMP investors were disappointed as the stock returned 8.7% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
