Is Dover Motorsports, Inc. (DVD) Going to Burn These Hedge Funds?

At Insider Monkey, we follow around 730 of the best-performing investors and even though many of them lost money in the last several months, the history teaches us that over the long-run they still manage to beat the market, which is why it can be profitable for us to imitate their activity. Of course, even the best money managers can sometimes get it wrong, but following some of their picks gives us a better chance to outperform the crowd than picking a random stock and this is where our research comes in.

Dover Motorsports, Inc. (NYSE:DVD) was in 5 hedge funds’ portfolios at the end of September. Dover Motorsports, Inc. (NYSE:DVD) investors should be aware of a decrease in support from the world’s most elite money managers of late. There were 6 hedge funds in our database with Dover Motorsports, Inc. (NYSE:DVD) positions at the end of the previous quarter. At the end of this article, we will also compare Dover Motorsports, Inc. (NYSE:DVD) to other stocks, including Universal Technical Institute, Inc. (NYSE:UTI), The L.S. Starrett Company (NYSE:SCX), and Covisint Corp (NASDAQ:COVS) to get a better sense of its popularity.

To the average investor, there are numerous formulas shareholders can use to assess publicly traded companies. Some of the less known formulas are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the top money managers can beat the broader indices by a healthy margin (see the details here).

With all of this in mind, we’re going to check out the new action encompassing Dover Motorsports, Inc. (NYSE:DVD).

Hedge fund activity in Dover Motorsports, Inc. (NYSE:DVD)

Heading into Q4, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a decline of 17% from one quarter earlier. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management has the largest position in Dover Motorsports, Inc. (NYSE:DVD), worth close to $3 million, accounting for 0.4% of its total 13F portfolio. Coming in second is Mario Gabelli of GAMCO Investors, with a $2.3 million position; less than 0.1% of its 13F portfolio is allocated to the company. Some other peers that are bullish comprise Paul Reeder and Edward Shapiro’s PAR Capital Management, and Renaissance Technologies.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Millennium 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 here because none of the 700+ hedge funds tracked by Insider Monkey identified DVD as a viable investment and initiated a position in the stock.

Let’s now review hedge fund activity in other stocks similar to Dover Motorsports, Inc. (NYSE:DVD). We will take a look at Universal Technical Institute, Inc. (NYSE:UTI), The L.S. Starrett Company (NYSE:SCX), Covisint Corp (NASDAQ:COVS), and The McClatchy Company (NYSE:MNI). All of these stocks’ market caps are similar to Dover Motorsports, Inc. (NYSE:DVD)’s market cap.

As you can see, these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $16 million. That figure was $15 million in Dover Motorsports, Inc. (NYSE:DVD)’s case. Universal Technical Institute, Inc. (NYSE:UTI) is the most popular stock in this table. On the other hand, The L.S. Starrett Company (NYSE:SCX) is the least popular one with only 4 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Universal Technical Institute, Inc. (NYSE:UTI) might be a better candidate to consider a long position.