What Do Hedge Funds Think of Famous Dave’s of America, Inc. (DAVE)?

The third quarter was a rough one for most investors, as fears of an interest rate hike in the U.S, a weakening economy in China, and a stagnant Europe, weighed heavily on the minds of investors. Both the S&P 500 and Russell 2000 sank as a result, with the Russell 2000, which is composed of smaller companies, being hit especially hard. This was primarily due to hedge funds, which are big supporters of small-cap stocks, pulling some of their capital out of the volatile markets during this time. Let’s look at how this market volatility affected the sentiment of hedge funds towards Famous Dave’s of America, Inc. (NASDAQ:DAVE), and what that likely means for the prospects of the company and its stock.

Hedge fund interest in Famous Dave’s of America, Inc. shares was flat at the end of last quarter. This is usually a negative indicator. 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 ADMA Biologics Inc (NASDAQ:ADMA), Taseko Mines Limited (USA) (NYSEMKT:TGB), and XOMA Corp (NASDAQ:XOMA) to gather more data points.

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Keeping this in mind, let’s take a peek at the new action regarding Famous Dave’s of America, Inc. (NASDAQ:DAVE).

What does the smart money think about Famous Dave’s of America, Inc. (NASDAQ:DAVE)?

When looking at the institutional investors followed by Insider Monkey, Charles Davidson’s Wexford Capital has the most valuable position in Famous Dave’s of America, Inc. (NASDAQ:DAVE), worth close to $17.2 million, comprising 3.3% of its total 13F portfolio. The second most bullish fund manager is LionEye Capital Management, led by Stephen V. Raneri, holding a $16 million position; 0.7% of its 13F portfolio is allocated to the stock. Some other peers that are bullish contain Jonathan Lennon’s Pleasant Lake Partners, Adam Wright and Gary Kohler’s Blue Clay Capital and Jim Simons’ Renaissance Technologies.

At the top of the heap, Gary Claar’s Claar Advisors said goodbye to the biggest stake of all the hedgies followed by Insider Monkey, worth about $0.7 million in stock, and Cliff Asness’s AQR Capital Management was right behind this move, as the fund dropped about $0.2 million worth. These moves are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks similar to Famous Dave’s of America, Inc. (NASDAQ:DAVE). We will take a look at ADMA Biologics Inc (NASDAQ:ADMA), Taseko Mines Limited (USA) (NYSEMKT:TGB), XOMA Corp (NASDAQ:XOMA), and USA Technologies, Inc. (NASDAQ:USAT). This group of stocks’ market values are closest to DAVE’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ADMA 6 49279 0
TGB 4 4094 -1
XOMA 11 5963 -9
USAT 5 2979 -1

As you can see these stocks had an average of 6.5 hedge funds with bullish positions and the average amount invested in these stocks was $16 million. That figure was $55 million in DAVE’s case. XOMA Corp (NASDAQ:XOMA) is the most popular stock in this table. On the other hand Taseko Mines Limited (USA) (NYSEMKT:TGB) is the least popular one with only 4 bullish hedge fund positions. Famous Dave’s of America, Inc. (NASDAQ:DAVE) 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 XOMA might be a better candidate to consider a long position.