Investment management company Cove Street Capital recently released its “Small Cap Value Fund” second quarter 2023 investor letter. A copy of the same can be downloaded here. On a relative and absolute basis, the fund continued its solid upward movement in the second quarter and returned 14.8% compared to 5.21% for the Russell 2000 Index and 3.18% for the Russell 2000 Value Index. In addition, you can check the top 5 holdings of the fund to know its best picks in 2023.
Cove Street Capital highlighted stocks like Motorcar Parts of America, Inc. (NASDAQ:MPAA) in the second quarter 2023 investor letter. Headquartered in Torrance, California, Motorcar Parts of America, Inc. (NASDAQ:MPAA) manufactures, remanufactures, and distributes automotive parts. On July 11, 2023, Motorcar Parts of America, Inc. (NASDAQ:MPAA) stock closed at $7.90 per share. One-month return of Motorcar Parts of America, Inc. (NASDAQ:MPAA) was 29.72%, and its shares lost 41.61% of their value over the last 52 weeks. Motorcar Parts of America, Inc. (NASDAQ:MPAA) has a market capitalization of $154.007 million.
Cove Street Capital made the following comment about Motorcar Parts of America, Inc. (NASDAQ:MPAA) in its second quarter 2023 investor letter:
“We recently initiated a position in Motorcar Parts of America, Inc. (NASDAQ:MPAA). MPAA primarily remanufactures starters and alternators for large aftermarket auto parts retailers such as O’Reilly Automotive (Ticker: ORLY), Advance Auto Parts (Ticker: AAP), and AutoZone (Ticker: AZO). As common in the industry, MPAA entered into an accounts receivable discount program many years ago with their auto part retailer customers, and now as interest rates are rising, interest expense on these programs have tripled, causing a significant deterioration in earnings. MPAA has recovered some of the lost earnings through price increases, and due to nearly 50% share of the remanufactured starters and alternators market, we believe more price increases are to come. Also, the company has recently been capitalized by a private equity firm, Bison Capital, with a $32M convertible note that converts at $15 per share versus the current share price of $7. The additional capital could help MPAA consolidate other aftermarket auto parts manufacturers that are struggling with the current industry dynamics and increased interest expense.”
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Motorcar Parts of America, Inc. (NASDAQ:MPAA) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 15 hedge fund portfolios held Motorcar Parts of America, Inc. (NASDAQ:MPAA) at the end of first quarter 2023 which was 7 in the previous quarter. In addition, please check out our hedge fund investor letters Q2 2023 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
