Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB) was in 11 hedge funds’ portfolio at the end of the first quarter of 2013. RRGB has experienced a decrease in enthusiasm from smart money recently. There were 11 hedge funds in our database with RRGB holdings at the end of the previous quarter.
According to most traders, hedge funds are perceived as slow, outdated financial tools of years past. While there are greater than 8000 funds with their doors open at the moment, we at Insider Monkey hone in on the top tier of this club, close to 450 funds. It is widely believed that this group controls most of the hedge fund industry’s total asset base, and by watching their top investments, we have brought to light a few investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).
Equally as important, bullish insider trading activity is a second way to break down the investments you’re interested in. Just as you’d expect, there are a number of reasons for an upper level exec to downsize shares of his or her company, but just one, very obvious reason why they would buy. Various academic studies have demonstrated the market-beating potential of this strategy if shareholders understand what to do (learn more here).
Consequently, let’s take a look at the recent action surrounding Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB).
How have hedgies been trading Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB)?
Heading into Q2, a total of 11 of the hedge funds we track held long positions in this stock, a change of 0% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings considerably.
When looking at the hedgies we track, Citadel Investment Group, managed by Ken Griffin, holds the largest position in Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB). Citadel Investment Group has a $10.5 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Royce & Associates, managed by Chuck Royce, which held a $7.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedgies that hold long positions include Cliff Asness’s AQR Capital Management, D. E. Shaw’s D E Shaw and Jim Simons’s Renaissance Technologies.
Seeing as Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB) has faced a declination in interest from the entirety of the hedge funds we track, it’s safe to say that there was a specific group of funds that decided to sell off their positions entirely last quarter. It’s worth mentioning that Brian Taylor’s Pine River Capital Management dumped the largest position of the “upper crust” of funds we track, comprising an estimated $0.9 million in stock., and Joel Greenblatt of Gotham Asset Management was right behind this move, as the fund cut about $0.4 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
What have insiders been doing with Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB)?
Insider trading activity, especially when it’s bullish, is at its handiest when the primary stock in question has experienced transactions within the past 180 days. Over the last 180-day time frame, Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB) has seen zero unique insiders purchasing, and 3 insider sales (see the details of insider trades here).
Let’s also take a look at hedge fund and insider activity in other stocks similar to Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB). These stocks are Denny’s Corporation (NASDAQ:DENN), Chuy’s Holdings Inc (NASDAQ:CHUY), Sonic Corporation (NASDAQ:SONC), CEC Entertainment, Inc. (NYSE:CEC), and Fiesta Restaurant Group Inc (NASDAQ:FRGI). This group of stocks are the members of the restaurants industry and their market caps resemble RRGB’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Denny’s Corporation (NASDAQ:DENN)||13||0||0|
|Chuy’s Holdings Inc (NASDAQ:CHUY)||4||0||11|
|Sonic Corporation (NASDAQ:SONC)||12||0||8|
|CEC Entertainment, Inc. (NYSE:CEC)||9||1||1|
|Fiesta Restaurant Group Inc (NASDAQ:FRGI)||18||1||2|
With the results shown by our research, retail investors must always watch hedge fund and insider trading sentiment, and Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB) is an important part of this process.