Is RRGB A Good Stock To Buy Now?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB) based on that data.

Is RRGB a good stock to buy now? Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB) shareholders have witnessed a decrease in hedge fund sentiment lately. Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB) was in 10 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 21. Our calculations also showed that RRGB isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are tons of metrics stock traders have at their disposal to assess publicly traded companies. Two of the less known metrics are hedge fund and insider trading signals. We have shown that, historically, those who follow the top picks of the best investment managers can outclass the S&P 500 by a solid margin (see the details here).

Dmitry Balyasny of Balyasny Asset Managemnet

Dmitry Balyasny of Balyasny Asset Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now we’re going to go over the latest hedge fund action surrounding Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB).

Do Hedge Funds Think RRGB Is A Good Stock To Buy Now?

At Q3’s end, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -29% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in RRGB over the last 21 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is RRGB A Good Stock To Buy?

According to Insider Monkey’s hedge fund database, Balyasny Asset Management, managed by Dmitry Balyasny, holds the most valuable position in Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB). Balyasny Asset Management has a $2.5 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Royce & Associates, managed by Chuck Royce, which holds a $2.4 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish comprise Paul Marshall and Ian Wace’s Marshall Wace LLP, Lee Ainslie’s Maverick Capital and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position GMT Capital allocated the biggest weight to Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB), around 0.1% of its 13F portfolio. Factorial Partners is also relatively very bullish on the stock, setting aside 0.08 percent of its 13F equity portfolio to RRGB.

Because Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB) has faced a decline in interest from hedge fund managers, it’s easy to see that there lies a certain “tier” of hedge funds who were dropping their entire stakes last quarter. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dropped the biggest stake of the “upper crust” of funds followed by Insider Monkey, valued at close to $2.8 million in stock, and Greg Eisner’s Engineers Gate Manager was right behind this move, as the fund dropped about $1.4 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 4 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB). We will take a look at Organigram Holdings Inc. (NASDAQ:OGI), Vera Bradley, Inc. (NASDAQ:VRA), Misonix, Inc. (NASDAQ:MSON), BlueLinx Holdings Inc. (NYSE:BXC), Nesco Holdings, Inc. (NYSE:NSCO), scPharmaceuticals Inc. (NASDAQ:SCPH), and PCSB Financial Corporation (NASDAQ:PCSB). This group of stocks’ market values match RRGB’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
OGI 4 1883 -1
VRA 17 29891 4
MSON 10 24393 3
BXC 13 64708 3
NSCO 11 11984 1
SCPH 12 85081 1
PCSB 11 17872 2
Average 11.1 33687 1.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.1 hedge funds with bullish positions and the average amount invested in these stocks was $34 million. That figure was $12 million in RRGB’s case. Vera Bradley, Inc. (NASDAQ:VRA) is the most popular stock in this table. On the other hand Organigram Holdings Inc. (NASDAQ:OGI) is the least popular one with only 4 bullish hedge fund positions. Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for RRGB is 38.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on RRGB as the stock returned 56.6% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.