How Top Investors Are Trading Dave & Buster’s Entertainment, Inc. (PLAY)

Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients’ money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth depends on it. Regardless of the various methods used by elite investors like David Tepper and Dan Loeb, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space.

Dave & Buster’s Entertainment, Inc. (NASDAQ:PLAY) investors should pay attention to a decrease in enthusiasm from smart money of late, as the stock was contained in 23 portfolios managed by elite investors as of September 30. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Dean Foods Co (NYSE:DF), Eros International plc (NYSE:EROS), and Press Ganey Holdings Inc (NYSE:PGND) to gather more data points.

In today’s marketplace, there are dozens of methods stock traders employ to assess stocks. A pair of the most innovative methods are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the elite investment managers can trounce their index-focused peers by a very impressive amount (see the details here).

Now, let’s take a peek at the fresh action encompassing Dave & Buster’s Entertainment, Inc. (NASDAQ:PLAY).

What does the smart money think about Dave & Buster’s Entertainment, Inc. (NASDAQ:PLAY)?

At the end of Q3, a total of 23 of the hedge funds tracked by Insider Monkey were long in this stock, a decline of 12% from the previous quarter. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Columbus Circle Investors, managed by Clifford Fox, holds the most valuable position in Dave & Buster’s Entertainment, Inc. (NASDAQ:PLAY). Columbus Circle Investors has a $22.8 million position in the stock, comprising 0.2% of its 13F portfolio. The second-most bullish fund manager is Doug Gordon, Jon Hilsabeck and Don Jabro of Shellback Capital, with a $20.8 million position; 1.9% of its 13F portfolio is allocated to the company. Some other peers that are bullish contain Israel Englander’s Millennium Management, Steve Pei’s Gratia Capital, and Brad Dunkley and Blair Levinsky’s Waratah Capital Advisors.

Judging by the fact that Dave & Buster’s Entertainment, Inc. (NASDAQ:PLAY) has faced falling interest from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of money managers that elected to cut their positions entirely heading into Q4. It’s worth mentioning that Bart Baum’s Ionic Capital Management dropped the biggest investment of the “upper crust” of funds followed by Insider Monkey, comprising about $14.4 million in stock, and Anand Parekh of Alyeska Investment Group was right behind this move, as the fund dropped about $13.8 million worth of shares. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 3 funds heading into Q4.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Dave & Buster’s Entertainment, Inc. (NASDAQ:PLAY) but similarly valued. We will take a look at Dean Foods Co (NYSE:DF), Eros International plc (NYSE:EROS), Press Ganey Holdings Inc (NYSE:PGND), and Nelnet, Inc. (NYSE:NNI). This group of stocks’ market caps is close to Dave & Buster’s Entertainment, Inc. (NASDAQ:PLAY)’s market cap.

As you can see, these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $112 million. That figure was $165 million in Dave & Buster’s Entertainment, Inc. (NASDAQ:PLAY)’s case. Dean Foods Co (NYSE:DF) is the most popular stock in this table. On the other hand, Press Ganey Holdings Inc (NYSE:PGND) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks, Dave & Buster’s Entertainment, Inc. (NASDAQ:PLAY) is more popular among hedge funds despite the slip in ownership. Considering that hedge funds are fond of this stock in relation to its market cap peers and have more money invested in it, it may be a good idea to analyze it in detail and potentially include it in your portfolio.