Should You Avoid Standard Motor Products, Inc. (SMP)?

Standard Motor Products, Inc. (NYSE:SMP) has seen a decrease in activity from the world’s largest hedge funds of late.

In the financial world, there are tons of gauges investors can use to track publicly traded companies. A couple of the most under-the-radar are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the elite fund managers can outpace their index-focused peers by a very impressive margin (see just how much).

Equally as integral, positive insider trading activity is another way to break down the marketplace. Obviously, there are lots of motivations for an insider to drop shares of his or her company, but only one, very simple reason why they would behave bullishly. Various academic studies have demonstrated the valuable potential of this tactic if shareholders know where to look (learn more here).

With all of this in mind, let’s take a peek at the latest action encompassing Standard Motor Products, Inc. (NYSE:SMP).

What have hedge funds been doing with Standard Motor Products, Inc. (NYSE:SMP)?

Heading into Q2, a total of 12 of the hedge funds we track were long in this stock, a change of -14% from the previous quarter. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were increasing their holdings significantly.

When looking at the hedgies we track, Royce & Associates, managed by Chuck Royce, holds the most valuable position in Standard Motor Products, Inc. (NYSE:SMP). Royce & Associates has a $26 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Jim Simons of Renaissance Technologies, with a $10.8 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedge funds that hold long positions include Cliff Asness’s AQR Capital Management, Mario Gabelli’s GAMCO Investors and Israel Englander’s Millennium Management.

Seeing as Standard Motor Products, Inc. (NYSE:SMP) has experienced declining sentiment from the smart money, we can see that there exists a select few hedgies that decided to sell off their entire stakes at the end of the first quarter. At the top of the heap, Ken Griffin’s Citadel Investment Group dumped the largest position of the “upper crust” of funds we key on, comprising about $0.7 million in stock.. Paul Tudor Jones’s fund, Tudor Investment Corp, also dumped its stock, about $0.2 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 2 funds at the end of the first quarter.

Insider trading activity in Standard Motor Products, Inc. (NYSE:SMP)

Insider buying is most useful when the company we’re looking at has experienced transactions within the past six months. Over the latest 180-day time frame, Standard Motor Products, Inc. (NYSE:SMP) has experienced zero unique insiders buying, and 8 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Standard Motor Products, Inc. (NYSE:SMP). These stocks are Meritor Inc (NYSE:MTOR), Superior Industries International Inc. (NYSE:SUP), Gentherm Inc (NASDAQ:THRM), Remy International Inc (NASDAQ:REMY), and Federal-Mogul Corporation (NASDAQ:FDML). This group of stocks are in the auto parts industry and their market caps match SMP’s market cap.

With the returns exhibited by our studies, everyday investors must always keep an eye on hedge fund and insider trading activity, and Standard Motor Products, Inc. (NYSE:SMP) applies perfectly to this mantra.

Click here to learn why you should track hedge funds