Positive week for Motorcar Parts of America, Inc. (NASDAQ:MPAA) institutional investors who lost 17% over the past year

Key Insights

• Institutions' substantial holdings in Motorcar Parts of America implies that they have significant influence over the company's share price
• The top 8 shareholders own 54% of the company
• Insiders have bought recently

To get a sense of who is truly in control of Motorcar Parts of America, Inc. (NASDAQ:MPAA), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 67% to be precise, is institutions. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Last week's US$13m market cap gain would probably be appreciated by institutional investors, especially after a year of 17% losses.

Let's take a closer look to see what the different types of shareholders can tell us about Motorcar Parts of America.

View our latest analysis for Motorcar Parts of America

What Does The Institutional Ownership Tell Us About Motorcar Parts of America?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

We can see that Motorcar Parts of America does have institutional investors; and they hold a good portion of the company's stock. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Motorcar Parts of America's earnings history below. Of course, the future is what really matters.

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. It looks like hedge funds own 16% of Motorcar Parts of America shares. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. The company's largest shareholder is Private Capital Management, LLC, with ownership of 14%. In comparison, the second and third largest shareholders hold about 9.6% and 6.2% of the stock. In addition, we found that Selwyn Joffe, the CEO has 2.4% of the shares allocated to their name.

On further inspection, we found that more than half the company's shares are owned by the top 8 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Motorcar Parts of America

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

We can see that insiders own shares in Motorcar Parts of America, Inc.. In their own names, insiders own US$5.7m worth of stock in the US$133m company. This shows at least some alignment, but we usually like to see larger insider holdings. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 13% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Motorcar Parts of America. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Case in point: We've spotted 2 warning signs for Motorcar Parts of America you should be aware of.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.