Many investors, including Carl Icahn or Stan Druckenmiller, have been saying for a while now that the current market is overvalued due to a low interest rate environment that leads to companies swapping their equity for debt and focusing mostly on short-term performance such as beating the quarterly earnings estimates. In the third quarter, many investors lost money due to unpredictable events such as the concerns over Valeant’s drug pricing policy that led to an overall drop among pharma stocks. Nevertheless, many of the stocks that tanked in the third quarter still sport strong fundamentals and their decline was more related to the general market sentiment rather than their individual performance and hedge funds kept their bullish stance. In this article we will find out how hedge fund sentiment to Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB) changed recently.
Is Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB) a bargain? Money managers are taking a bearish view. The number of bullish hedge fund bets retreated by 4 in recent months. RRGB was in 21 hedge funds’ portfolios at the end of September. There were 25 hedge funds in our database with RRGB positions at the end of the previous 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 Trex Company, Inc. (NYSE:TREX), Amkor Technology, Inc. (NASDAQ:AMKR), and Opus Bank (NASDAQ:OPB) to gather more data points.
In today’s marketplace there are a multitude of metrics stock market investors can use to appraise publicly traded companies. Some of the best metrics are hedge fund and insider trading moves. We have shown that, historically, those who follow the top picks of the top investment managers can outpace their index-focused peers by a solid margin (see the details here).
Now, let’s view the recent action surrounding Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB).
How have hedgies been trading Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB)?
At the end of the third quarter, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -16% from the second quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Millennium Management, managed by Israel Englander, holds the most valuable position in Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB). Millennium Management has an $28.5 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Cadian Capital, led by Eric Bannasch, holding an $16 million position; the fund has 0.6% of its 13F portfolio invested in the stock. Other professional money managers that are bullish include Dmitry Balyasny’s Balyasny Asset Management, Legg Mason Capital Management and Joseph A. Jolson’s Harvest Capital Strategies.