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The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on September 30th, about a month before the elections. We at Insider Monkey have made an extensive database of more than 817 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Dover Motorsports, Inc. (NYSE:DVD) based on those filings.
Dover Motorsports, Inc. (NYSE:DVD) was in 3 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 6. DVD has experienced a decrease in support from the world's most elite money managers lately. There were 4 hedge funds in our database with DVD positions at the end of the second quarter. Our calculations also showed that DVD 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).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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 10 most profitable companies in the world 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 we're going to take a gander at the latest hedge fund action encompassing Dover Motorsports, Inc. (NYSE:DVD).
What have hedge funds been doing with Dover Motorsports, Inc. (NYSE:DVD)?
Heading into the fourth quarter of 2020, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from the second quarter of 2020. On the other hand, there were a total of 4 hedge funds with a bullish position in DVD a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Wilmot B. Harkey and Daniel Mack's Nantahala Capital Management has the number one position in Dover Motorsports, Inc. (NYSE:DVD), worth close to $2.7 million, corresponding to 0.1% of its total 13F portfolio. The second most bullish fund manager is GAMCO Investors, led by Mario Gabelli, holding a $1.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. In terms of the portfolio weights assigned to each position Nantahala Capital Management allocated the biggest weight to Dover Motorsports, Inc. (NYSE:DVD), around 0.08% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, earmarking 0.01 percent of its 13F equity portfolio to DVD.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: PAR Capital Management. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified DVD as a viable investment and initiated a position in the stock.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Dover Motorsports, Inc. (NYSE:DVD) but similarly valued. We will take a look at Jerash Holdings (US), Inc. (NASDAQ:JRSH), Sonim Technologies, Inc. (NASDAQ:SONM), Baudax Bio, Inc. (NASDAQ:BXRX), Atlas Technical Consultants, Inc. (NASDAQ:ATCX), Trxade Group, Inc. (NASDAQ:MEDS), Moleculin Biotech, Inc. (NASDAQ:MBRX), and IF Bancorp Inc (NASDAQ:IROQ). All of these stocks' market caps match DVD's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position JRSH,3,927,0 SONM,6,4971,-5 BXRX,7,5134,-3 ATCX,9,10487,-1 MEDS,2,3855,0 MBRX,2,895,0 IROQ,2,2301,0 Average,4.4,4081,-1.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.4 hedge funds with bullish positions and the average amount invested in these stocks was $4 million. That figure was $5 million in DVD's case. Atlas Technical Consultants, Inc. (NASDAQ:ATCX) is the most popular stock in this table. On the other hand Trxade Group, Inc. (NASDAQ:MEDS) is the least popular one with only 2 bullish hedge fund positions. Dover Motorsports, Inc. (NYSE:DVD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for DVD is 26.1. 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 28.1% in 2020 through November 23rd and still beat the market by 15.4 percentage points. A small number of hedge funds were also right about betting on DVD as the stock returned 40.1% since the end of the third quarter (through 11/23) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.