After losing 48% in the past year, Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB) institutional owners must be relieved by the recent gain

Key Insights

• Given the large stake in the stock by institutions, Red Robin Gourmet Burgers' stock price might be vulnerable to their trading decisions
• A total of 9 investors have a majority stake in the company with 52% ownership
• Using data from analyst forecasts alongside ownership research, one can better assess the future performance of a company

A look at the shareholders of Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are institutions with 59% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

After a year of 48% losses, last week’s 11% gain would be welcomed by institutional investors as a possible sign that returns might start trending higher.

Let's delve deeper into each type of owner of Red Robin Gourmet Burgers, beginning with the chart below.

Check out our latest analysis for Red Robin Gourmet Burgers

What Does The Institutional Ownership Tell Us About Red Robin Gourmet Burgers?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

We can see that Red Robin Gourmet Burgers does have institutional investors; and they hold a good portion of the company's 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Red Robin Gourmet Burgers' historic earnings and revenue below, but keep in mind there's always more to the story.

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. Our data indicates that hedge funds own 18% of Red Robin Gourmet Burgers. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Our data shows that Archon Capital Management LLC is the largest shareholder with 12% of shares outstanding. With 7.2% and 6.3% of the shares outstanding respectively, BlackRock, Inc. and Soviero Asset Management, LP are the second and third largest shareholders. Additionally, the company's CEO Gerard Hart directly holds 1.0% of the total shares outstanding.

We did some more digging and found that 9 of the top shareholders account for roughly 52% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Red Robin Gourmet Burgers

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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 most recent data indicates that insiders own some shares in Red Robin Gourmet Burgers, Inc.. In their own names, insiders own US$5.0m worth of stock in the US$104m company. It is good to see some investment by insiders, but we usually like to see higher insider holdings. It might be worth checking if those insiders have been buying.

General Public Ownership

The general public-- including retail investors -- own 18% stake in the company, and hence can't 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Red Robin Gourmet Burgers better, we need to consider many other factors. Be aware that Red Robin Gourmet Burgers is showing 3 warning signs in our investment analysis , you should know about...

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.