Chris O'Donnell was terminated as President and COO effective end of March. Soon the company will announce their replacement for this position. While Ed Rensi has been named interim CEO and may be instrumental in developing a growth plan for Famous Dave's, I doubt that he will replace O'Donnell. Activist hedge fund managers Patrick Walsh and Adam Wright have made bold changes in this company because they have large investments in the company compared to the previous management which mostly looked to line their own pockets. I predict they will make another bold choice to head this company as President and COO. When that announcement, I would not want to be short this stock.
Sentiment: Strong Buy
When the hedge funds took over this company, it was clear that big change was coming. This step was needed in order to take the company in the direction that Ed Rensi wants to take it. I like it.
Sentiment: Strong Buy
Certainly not going to have any margin calls if you're long and have big gains in this stock. As for whether DAVE can still move up further, look at the Zacks article from today.
Certainly bullish on Ed Rensi although neither mentioned that the company bought back 1/3 of its stock since the last high making it even cheaper now than you'd think. Best to buy now while there are still shares available at this price.
I think Roxette wishes she hadn't shorted this stock.
Actually, DAVE is nowhere near a 5 year high. They've bought back 1/3 (4 million shares) of their shares over the last 5 to 6 years. When the stock was trading at $20 five years ago, the market cap was 12,000,000 shares X $20 = $240 million. The market cap now is 8,000,000 shares X $21 = $168 million. The share price would have to go to $30 before it reaches the new 5 year high. As for the plans on who the new CEO will be, listen in to the conference call on Thursday morning to get some indication. If the stock goes up before then, it is more a matter of a short squeeze than earnings related.
Another hedge fund picked up 8% of the company ownership and added a managing partner to the DAVE board of directors. Another bullish development. $25 by summer.
I wouldn't say I'm a smart guy but my guess is that it will be even or down some, around 165k. Some of the buying in the last run up must have been shorts covering although I haven't seen signs of capitulation yet. I'm sticking with a target of $25 (or higher) by next summer.
Adjusted for the 4 million shares bought back by the company, the all time high for DAVE is around $30 so there is still room to go before it reaches that level (which I think it will). The company is going through a re-org which has been improving margins. I'd like to see it grow more into Canada where the first DAVE location set sales records. And yes, commodity prices have been coming down following the drought from last year.
There certainly had to be some covering yesterday after the stock went above it's 52 week high. Squeezes come and go in short time periods. I suspect if it trades above 18.25 today, there will be a bit of a squeeze again today. The real news is the earnings after market close today.
With short interest now up to 43 days (huge) to cover, end of quarter coming up on Monday, stock nearing a 52 week high, we are starting to see the perfect storm for a short squeeze over the next 4 days. Easy money for who ever wants it.
DAVE is trading at only half it's value prior to the last bear market. With new management aggressively reducing G&A expense, increasing margins, and focusing on the bottom line, I can certainly see this trading above $25 in the next year.
Sentiment: Strong Buy
Also, with volume averaging only 7,000 shares over the last 11 or 12 days, the short ratio computes to about 28 days to cover. With a company this thinly traded, there is a short squeeze just waiting to happen.
WIth only 4,000 shares/day trading for the last few days, I have to think any buying at all could start a bit of a short squeeze. Not a risk I would want to take with 192,000 shares short and so thinly traded. That sell at $16.30 has been out there a long time. I think there will be people who will wish they had grabbed those when they had the chance.
Riesen has been executing more options (freebies he awarded himself) and selling shares. For anyone who has followed DAVE, they realize Dean Riesen has been a disaster on the Board of Directors. I'm hoping he gets booted out next annual meeting and replaced with Jonathan Lennon, another hedge fund manager who recently bought 5% of the company and is actually interested in improving the company and not just lining his own pocket.
I like that the new management has realized that G&A expenses are too high and reduced upper level management by 35%. Paying down debt is also much better than buying back stock. I especially like the growth in profit margin. With short interest at 247,000 shares (the highest I've ever seen for this stock) there should be quite a few people buying (and covering) tomorrow. The new management has outlined an 18 month plan for turning around operations and we are only at the beginning so I'll be holding on to my shares for a while.