Dover Motorsports, Inc. (DVD): Are Hedge Funds Right About This Stock?

Is Dover Motorsports, Inc. (NYSE:DVD) going to take off soon? Hedge funds are becoming hopeful. The number of bullish hedge fund positions went up by 1 recently.

In the eyes of most shareholders, hedge funds are seen as slow, outdated investment tools of the past. While there are more than 8000 funds with their doors open at the moment, we at Insider Monkey look at the leaders of this club, about 450 funds. It is widely believed that this group controls most of the smart money’s total asset base, and by paying attention to their highest performing stock picks, we have brought to light a number of investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Equally as important, positive insider trading activity is a second way to break down the stock market universe. Obviously, there are many reasons for a bullish insider to sell shares of his or her company, but just one, very obvious reason why they would behave bullishly. Several academic studies have demonstrated the valuable potential of this method if “monkeys” understand what to do (learn more here).

With these “truths” under our belt, it’s important to take a glance at the key action regarding Dover Motorsports, Inc. (NYSE:DVD).

How have hedgies been trading Dover Motorsports, Inc. (NYSE:DVD)?

At Q1’s end, a total of 7 of the hedge funds we track were long in this stock, a change of 17% from one quarter earlier. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were increasing their stakes significantly.

When looking at the hedgies we track, Jim Roumell’s Roumell Asset Management had the biggest position in Dover Motorsports, Inc. (NYSE:DVD), worth close to $3.4 million, accounting for 2.1% of its total 13F portfolio. The second largest stake is held by Wilmot B. Harkey and Daniel Mack of Nantahala Capital Management, with a $2.9 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Some other peers that hold long positions include Mario Gabelli’s GAMCO Investors, John W. Rogers’s Ariel Investments and Paul Reeder and Edward Shapiro’s PAR Capital Management.

As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Ariel Investments, managed by John W. Rogers, assembled the most outsized position in Dover Motorsports, Inc. (NYSE:DVD). Ariel Investments had 1.6 million invested in the company at the end of the quarter.

Insider trading activity in Dover Motorsports, Inc. (NYSE:DVD)

Insider trading activity, especially when it’s bullish, is particularly usable when the primary stock in question has seen transactions within the past half-year. Over the last half-year time period, Dover Motorsports, Inc. (NYSE:DVD) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Dover Motorsports, Inc. (NYSE:DVD). These stocks are Life Time Fitness, Inc. (NYSE:LTM), International Speedway Corporation (NASDAQ:ISCA), Speedway Motorsports, Inc. (NYSE:TRK), and Town Sports International Holdings, Inc. (NASDAQ:CLUB). This group of stocks belong to the sporting activities industry and their market caps match DVD’s market cap.

With the results demonstrated by Insider Monkey’s tactics, retail investors must always monitor hedge fund and insider trading activity, and Dover Motorsports, Inc. (NYSE:DVD) is no exception.

Click here to learn why you should track hedge funds