Darling Ingredients Inc (DAR), Dover Downs Gaming & Entertainment Inc. (DDE): Gates Capital Management Latest Moves

In two new filings with the U.S. Securities and Exchange Commission, Gates Capital Management, a fund led by Jeffrey Gates, disclosed boosting its stake in Darling Ingredients Inc (NYSE:DAR), and, at the same time, cutting its exposure to Dover Downs Gaming & Entertainment Inc. (NYSE:DDE).

Capital Management seems to be a big fan of Darling Ingredients Inc (NYSE:DAR), in which the fund boosted its passive stake to 17.11 million shares, representing 10.4% of the company’s common stock. The stake represents an increase from 12.58 million shares Gates Capital Management held earlier. In its latest 13F, Gates Capital Management reported holding 14.78 million shares of Darling Ingredients Inc (NYSE:DAR).

Darling Ingredients

On the other hand, Gates Capital Management has considerably reduced its passive stake in Dover Downs Gaming & Entertainment Inc. (NYSE:DDE), owning 940,352 shares of the company’s common stock, which is down from 1.94 million shares the fund held previously. The new stake is equal to 5.3% of the company’s stock.

New York-based hedge fund Gates Capital Management was founded in 1996 by Jeffrey. Gates Capital is an event-driven alternative asset manager, according to the fund’s website. Gates is currently managing partner of Gates Capital. Mr. Gates is an event-driven investor seeks to identify “dislocation events” at public companies, which are creating cash flow and sustainable value.

Gates Capital Management focuses on industrial good, basic materials, consumer goods and services stocks. According to its most recent 13F, the value of the fund’s equity portfolio amounted to $3.3 billion in the third quarter of 2014. The fund disclosed its largest investments in Darling Ingredients Inc (NYSE:DAR), Nortek Inc (NASDAQ:NTK), and Allison Transmission Holdings Inc. (NYSE:ALSN).

During the third quarter, Gates Capital Management upped its stake in Nortek Inc (NASDAQ:NTK) to 3.23 million shares, which representing more than 20% of all common stock of the company. Gates Capital Management was also bullish on Allison Transmission Holdings Inc. (NYSE:ALSN), in which it increased its stake by more than 10% to nearly 7 million shares.

Darling Ingredients Inc (NYSE:DAR) is engaged in developing and producing sustainable natural ingredients from edible and inedible bio-nutrients. The company has a market cap of $2.8 billion. For the first nine months of 2014, the company reported a net loss of $5.72 million, compared to net income of $86.5 million in the same period in 2013. The company’s sales were around $2.9 billion, up from $1.3 billion a year ago. On Wednesday, the company’s stock was trading at around $17.52. Overall, the share price of Darling Ingredients Inc (NYSE:DAR) dropped by 3.3% year-to-date, and over 14% in last year.

Nevertheless, Darling Ingredients Inc (NYSE:DAR) seems to be a favorite stock for Scopia Capital, led by Matt Sirovich and Jeremy Mindich. The investor upped its position in the company by more than 20% to around 10 million shares during the third quarter of last year. Point72 Asset Management, run by Steve Cohen, was also bullish on Darling Ingredients Inc (NYSE:DAR) during the same period, boosting its stake by more than 100% to 4.44 million shares.

Now, let’s talk about Dover Downs Gaming & Entertainment Inc. (NYSE:DDE), a Delaware-based gaming and entertainment company that operates the Dover Downs Hotel & Casino and Dover Downs Raceway. Dover Downs Hotel & Casino is comprised of a 165,000 square-foot video lottery casino complex and an adjoining hotel, while Dover Downs Raceway a harness racing track with pari-mutuel wagering on live and simulcast horse races.

Dover Downs Gaming & Entertainment Inc. (NYSE:DDE) has a market cap of 27.8 million. Its stock price slid by more than 40% over the last. However, since the beginning of the year-to-date performance stands at 10.57%. Since the company has a market cap of just $29 million, one of its characteristics is a big stock price volatility. In addition, the company’s revenues for nine months ended September 2014 were nearly $140 million, down from $150.6 million in the same period in 2013, and the company turned to a net loss of $0.01 per share for the first nine months, compared to net earnings of $0.01 a year ago.

Renaissance Technologies, led by Jim Simons, slightly raised its stake in Dover Downs Gaming & Entertainment Inc. (NYSE:DDE), holding 235,700 shares of the company as of the end of September. Mario Gabelli’s GAMCO Investors, however, cut its stake during the third quarter by 10% to 117,185 shares.

Disclosure: none