How Much Of RAVE Restaurant Group, Inc. (NASDAQ:RAVE) Do Insiders Own?

By
Simply Wall St
Published
June 01, 2020

The big shareholder groups in RAVE Restaurant Group, Inc. (NASDAQ:RAVE) have power over the company. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies. I quite like to see at least a little bit of insider ownership. As Charlie Munger said 'Show me the incentive and I will show you the outcome.

RAVE Restaurant Group is not a large company by global standards. It has a market capitalization of US$14m, which means it wouldn't have the attention of many institutional investors. In the chart below, we can see that institutions own shares in the company. Let's take a closer look to see what the different types of shareholder can tell us about RAVE Restaurant Group.

See our latest analysis for RAVE Restaurant Group

NasdaqCM:RAVE Ownership Summary June 1st 2020

What Does The Institutional Ownership Tell Us About RAVE Restaurant Group?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

We can see that RAVE Restaurant Group does have institutional investors; and they hold 24% of the stock. This suggests some credibility amongst professional investors. But we can't rely on that fact alone, since institutions make bad investments sometimes, just like everyone does. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at RAVE Restaurant Group's earnings history, below. Of course, the future is what really matters.

NasdaqCM:RAVE Income Statement June 1st 2020

It would appear that 20% of RAVE Restaurant Group shares are controlled by hedge funds. That's interesting, because hedge funds can be quite active and activist. Many look for medium term catalysts that will drive the share price higher. Newcastle Partners, LP is currently the largest shareholder, with 20% of shares outstanding. The second and third largest shareholders are American Hallmark Insurance Co Of Texas Inc, Asset Management Arm and Brian Bares, holding 12% and 9.2%, respectively. Brian Bares also happens to hold the title of Member of the Board of Directors.

On studying the facts and figures more closely, we found that 6 of the top shareholders account for 51% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of RAVE Restaurant Group

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our information suggests that insiders maintain a significant holding in RAVE Restaurant Group, Inc.. Insiders have a US$1.8m stake in this US$14m business. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public, with a 43% stake in the company, will not easily be ignored. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. To that end, you should be aware of the 2 warning signs we've spotted with RAVE Restaurant Group .

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Thank you for reading.

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