The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 817 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of September 30th, about a month before the elections. In this article we look at what those investors think of Standard Motor Products, Inc. (NYSE:SMP).
Is SMP a good stock to buy now? Prominent investors were taking an optimistic view. The number of long hedge fund bets moved up by 4 in recent months. Standard Motor Products, Inc. (NYSE:SMP) was in 19 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 19. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that SMP isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 15 hedge funds in our database with SMP holdings at the end of June.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Mario Gabelli of GAMCO Investors
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now let's view the key hedge fund action surrounding Standard Motor Products, Inc. (NYSE:SMP).
Do Hedge Funds Think SMP Is A Good Stock To Buy Now?
At third quarter's end, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 27% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SMP over the last 21 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Royce & Associates held the most valuable stake in Standard Motor Products, Inc. (NYSE:SMP), which was worth $49 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $9.1 million worth of shares. GAMCO Investors, Citadel Investment Group, and Renaissance Technologies were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Royce & Associates allocated the biggest weight to Standard Motor Products, Inc. (NYSE:SMP), around 0.53% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, designating 0.37 percent of its 13F equity portfolio to SMP.
Now, some big names have jumped into Standard Motor Products, Inc. (NYSE:SMP) headfirst. GLG Partners, managed by Noam Gottesman, assembled the most outsized position in Standard Motor Products, Inc. (NYSE:SMP). GLG Partners had $1.9 million invested in the company at the end of the quarter. Hoon Kim's Quantinno Capital also initiated a $0.6 million position during the quarter. The following funds were also among the new SMP investors: Dmitry Balyasny's Balyasny Asset Management, Michael Gelband's ExodusPoint Capital, and Donald Sussman's Paloma Partners.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Standard Motor Products, Inc. (NYSE:SMP) but similarly valued. We will take a look at Gravity Co., LTD. (NASDAQ:GRVY), Zogenix, Inc. (NASDAQ:ZGNX), Seacoast Banking Corporation of Florida (NASDAQ:SBCF), ePlus Inc. (NASDAQ:PLUS), StoneX Group Inc. (NASDAQ:SNEX), Tupperware Brands Corporation (NYSE:TUP), and Eventbrite, Inc. (NYSE:EB). This group of stocks' market values are similar to SMP's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GRVY,3,7704,-1 ZGNX,38,409878,0 SBCF,8,10417,1 PLUS,12,39170,-4 SNEX,12,113710,-2 TUP,18,108740,5 EB,22,192534,2 Average,16.1,126022,0.1 [/table]
As you can see these stocks had an average of 16.1 hedge funds with bullish positions and the average amount invested in these stocks was $126 million. That figure was $86 million in SMP's case. Zogenix, Inc. (NASDAQ:ZGNX) is the most popular stock in this table. On the other hand Gravity Co., LTD. (NASDAQ:GRVY) is the least popular one with only 3 bullish hedge fund positions. Standard Motor Products, Inc. (NYSE:SMP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SMP is 61.9. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on SMP as the stock returned 16.6% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
