Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.
Is Motorcar Parts of America, Inc. (NASDAQ:MPAA) going to take off soon? Investors who are in the know are undoubtedly taking a bearish view. The number of long hedge fund bets that are revealed through the 13F filings suffered a reduction of 5 in recent months. MPAA was in 10 hedge funds’ portfolios at the end of the third quarter of 2016. There were 15 hedge funds in our database with MPAA holdings at the end of the previous quarter. At the end of this article we will also compare MPAA to other stocks including Sabine Royalty Trust (NYSE:SBR), MDC Partners Inc. (USA) (NASDAQ:MDCA), and Lumber Liquidators Holdings Inc (NYSE:LL) to get a better sense of its popularity.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
Keeping this in mind, we’re going to take a glance at the key action surrounding Motorcar Parts of America, Inc. (NASDAQ:MPAA).
Hedge fund activity in Motorcar Parts of America, Inc. (NASDAQ:MPAA)
At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of -33% from the previous quarter. On the other hand, there were a total of 18 hedge funds with a bullish position in MPAA at the beginning of this year. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s elite fund database, Debra Fine’s Fine Capital Partners has the biggest position in Motorcar Parts of America, Inc. (NASDAQ:MPAA), worth close to $52.2 million, accounting for 5.4% of its total 13F portfolio. On Fine Capital Partners’s heels is Chuck Royce of Royce & Associates holding a $4.5 million position. Remaining peers that are bullish encompass Jim Simons’ Renaissance Technologies which is one of the largest hedge funds in the world, Bernard Horn’s Polaris Capital Management and Adam Wright and Gary Kohler’s Blue Clay Capital. We should note that none of these elite funds are among our list of the 100 best performing elite funds which is based on the performance of their 13F long positions in non-microcap stocks.
Due to the fact that Motorcar Parts of America, Inc. (NASDAQ:MPAA) has witnessed a decline in interest from hedge fund managers, logic holds that there exists a select few fund managers that elected to cut their entire stakes heading into Q4. Interestingly, Amy Minella’s Cardinal Capital cashed in the biggest investment of all the investors studied by Insider Monkey, comprising close to $7.3 million in stock. Glenn Russell Dubin’s fund, Highbridge Capital Management, also dumped its stock, about $0.7 million worth.
Let’s now take a look at hedge fund activity in other stocks similar to Motorcar Parts of America, Inc. (NASDAQ:MPAA). These stocks are Sabine Royalty Trust (NYSE:SBR), MDC Partners Inc. (USA) (NASDAQ:MDCA), Lumber Liquidators Holdings Inc (NYSE:LL), and PennantPark Investment Corp. (NASDAQ:PNNT). All of these stocks’ market caps are closest to MPAA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SBR | 7 | 13332 | 0 |
| MDCA | 13 | 104356 | -5 |
| LL | 14 | 62308 | 2 |
| PNNT | 5 | 1759 | 0 |
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $45 million. That figure was $64 million in MPAA’s case. Lumber Liquidators Holdings Inc (NYSE:LL) is the most popular stock in this table. On the other hand PennantPark Investment Corp. (NASDAQ:PNNT) is the least popular one with only 5 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. In this regard LL might be a better candidate to consider taking a long position in.
Disclosure: None
