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Hedge Funds Are Dumping Good Times Restaurants Inc. (GTIM)

Between June 25 and October 30th the Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by more than 14 percentage points as investors worried over the possible ramifications of rising interest rates. The hedge funds and institutional investors we track typically invest more in smaller-cap stocks than an average investor, and we have seen data that shows those funds paring back their overall exposure. Those funds cutting positions in small-caps is one reason why volatility has increased. In the following paragraphs, we take a closer look at what hedge funds and prominent investors think of Good Times Restaurants Inc. (NASDAQ:GTIM) and see how the stock is affected by the recent hedge fund activity.

Good Times Restaurants Inc. (NASDAQ:GTIM) investors should be aware of a decrease in hedge fund interest of late. Good Times Restaurants Inc. (NASDAQ:GTIM) was in 5 hedge funds’ portfolios at the end of the third quarter of 2015. There were 9 hedge funds in our database with Good Times Restaurants Inc. (NASDAQ:GTIM) positions at the end of the previous quarter. Considering a drop of 29.06% in its stock value, this bearish behavior may not come as a surprise. It demands a coverage of hedge funds that held stakes in the company at the end of the third quarter.

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 Biota Pharmaceuticals Inc (NASDAQ:BOTA), IRIDEX Corporation (NASDAQ:IRIX), and Approach Resources Inc. (NASDAQ:AREX) to gather more data points.

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To the average investor, there are a multitude of gauges market participants employ to value publicly traded companies. A pair of the most innovative gauges are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the top picks of the elite investment managers can outclass the S&P 500 by a superb amount (see the details here).

With all of this in mind, let’s take a gander at the latest action surrounding Good Times Restaurants Inc. (NASDAQ:GTIM).

What have hedge funds been doing with Good Times Restaurants Inc. (NASDAQ:GTIM)?

Heading into Q4, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a decline of 44% from the second quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Manatuck Hill Partners, managed by Mark Broach, holds the number one position in Good Times Restaurants Inc. (NASDAQ:GTIM). Manatuck Hill Partners has a $6.5 million position in the stock, comprising 2.8% of its 13F portfolio. The second most bullish fund manager is Driehaus Capital, managed by Richard Driehaus, which holds a $3.1 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other professional money managers that hold long positions contain Warren Lammert’s Granite Point Capital, Mark Coe’s Coe Capital Management, and Charles Davidson’s Wexford Capital.

Because Good Times Restaurants Inc. (NASDAQ:GTIM) has faced a bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there exists a select few funds that decided to sell off their positions entirely last quarter. At the top of the heap, Peter S. Park’s Park West Asset Management said goodbye to the biggest stake of the 700 funds monitored by Insider Monkey, comprising about $0.7 million in stock. Philip Hempleman’s fund, Ardsley Partners, also dropped its stock, about $0.4 million worth of shares. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 4 funds last quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Good Times Restaurants Inc. (NASDAQ:GTIM) but similarly valued. These stocks are Biota Pharmaceuticals Inc (NASDAQ:BOTA), IRIDEX Corporation (NASDAQ:IRIX), Approach Resources Inc. (NASDAQ:AREX), and First South Bancorp, Inc. (NASDAQ:FSBK). All of these stocks’ market caps match Good Times Restaurants Inc. (NASDAQ:GTIM)’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BOTA 5 8715 -3
IRIX 4 3012 2
AREX 4 7014 -4
FSBK 4 5963 0

As you can see, these stocks had an average of 4 hedge funds with bullish positions and the average amount invested in these stocks was $6 million. That figure was $13 million in Good Times Restaurants Inc. (NASDAQ:GTIM)’s case. Biota Pharmaceuticals Inc (NASDAQ:BOTA) is the most popular stock in this table. On the other hand, IRIDEX Corporation (NASDAQ:IRIX) is the least popular one with only 4 bullish hedge fund positions. Good Times Restaurants Inc. (NASDAQ:GTIM) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Biota Pharmaceuticals Inc (NASDAQ:BOTA) might be a better candidate to consider a long position.

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