Charles Davidson’s Wexford Capital has fired a return salvo against Lioneye Capital Management, adding 10,000 shares to their holding of Famous Dave’s of America Inc (NASDAQ:DAVE), and retaking the shareholder lead with 710,725 shares. Wexford Capital also reported reducing their stake in RLJ Entertainment Inc (NASDAQ:RLJE), of whom they are also the largest shareholder, by 83,000 shares to 1.47 million.
We reported a few days ago on that Stephen V. Raneri’s LionEye Capital Management raised its activist position in Famous Dave’s of America Inc (NASDAQ:DAVE) by 48,900 shares to their holding in the restaurant chain. That gave them a total of 702,900 shares, temporarily making them the largest shareholder of Famous Dave’s among institutional investors until being overtaken again just days later by Wexford.
Wexford is a Greenwich, Connecticut-based hedge fund which was founded in 1994 and now operates several fund portfolios with diverse goals; they have been the top shareholder in Famous Dave’s at the end of each of the first three quarters of 2014, and the largest RLJ shareholder since that company’s IPO in October 2012.
Unlike LionEye, Wexford Capital’s position is passive ever since adding Famous Dave’s of America Inc (NASDAQ:DAVE) to their portfolio in early 2014 and becoming their top shareholder. They got in at the perfect time, when Famous Dave’s was in the middle of a steady rise that would reach its peak in early June, having nearly doubled in value since the beginning of the year at that point. Since then, the stock has retreated somewhat, as restaurant traffic remains sluggish across the industry.
Famous Dave’s of America Inc (NASDAQ:DAVE) operates and franchises restaurants in the United States, where it was founded, as well as in Canada and Puerto Rico, where it’s simply known as Famous Dave’s. The first Famous Dave’s (which sadly burned to the ground late last year) opened in Hayward, Wisconsis in 1994, and since then, 49 additional company-owned restaurants, and 139 franchised restaurants have opened.
In their most recent earnings report for the third quarter of 2014, Famous Dave’s of America Inc (NASDAQ:DAVE) reported a decrease in revenue from $39.5 million to $37.7 million. Same-store revenue from company-owned restaurants open at least 24 months also tumbled 5.7% during the quarter. For the first nine months of 2014, revenue fell from $119.7 million during the first nine months of 2013, to $115.3 million, while same-store sales from company-owned restaurants open at least 24 months fell 5.2%, compared to a 0.9% increase during the same period in 2013.
Other major shareholders of Famous Dave’s of America Inc (NASDAQ:DAVE) in addition to the aforementioned Lioneye Capital Management are Brian Jackelow’s SAB Capital Management, with 634,105 shares, and Jim Simons’ Renaissance Technologies, with 333,600 shares.
In the case of RLJ Entertainment Inc (NASDAQ:RLJE), Wexford’s 1.47 million shares in the company still express confidence in the digital distributor and entertainment developer’s stock, despite its struggles. They originally purchased around 1.33 million shares at $5 each during RLJ’s IPO, and though the stock initially opened at $8.50, it’s been a mostly downhill slide since; RLJ Entertainment is currently trading at just $1.99. David Keidan’s Buckingham Capital Management is another major RLJ shareholder, with 517,951 shares.
While Wexford is the largest shareholder in both Famous Dave’s and RLJ, those holdings are not the most prominent in their portfolio, coming in at 4th and 39th place in terms of value respectively. Instead, Diamondback Energy, Inc. (NASDAQ:FANG) is by far their most valuable holding. Their 7.2 million shares in the company are worth $538 million, representing nearly 50% of the value of Wexford’s $1.09 billion equity portfolio as of September 30.
Wexford Capital also has large positions in Rhino Resource Partners Lp (NYSE:RNO), and American Airlines Group Inc (NASDAQ:AAL), with 6.64 million shares in the former, and 1.05 million shares in the latter. They raised their position by 64% in the latter during the third quarter of 2014, and the stock responded in kind with a strong finish to the year, rising nearly 50% during the final three months of 2014.
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