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key insights
- Retail investors own a large stake in RCI Hospitality Holdings, suggesting they have a greater say in management and business strategy
- A total of 23 investors own a majority stake in the company, with a shareholding ratio of 50%
- Institutions own 33% of RCI Hospitality Holdings
If you want to know who really controls RCI Hospitality Holdings, Inc. (NASDAQ:RICK), then you have to look at the makeup of its stock registry. We can see that retail investors own the largest stake in the company, with a 44% ownership ratio. That is, the group will benefit the most if the stock price rises (and lose the most if the stock price falls).
While institutions, which own 33% of the stock, were not immune to a $50 million drop in market capitalization last week, retail investors as a group suffered the most
Let’s take a closer look to see what the different types of shareholders can tell us about RCI Hospitality Holdings.
Check out our latest analysis for RCI Hospitality Holdings
What does institutional ownership tell us about RCI Hospitality Holdings?
Institutional investors often compare their own returns to the returns of a commonly followed index. Therefore, they will typically consider buying larger companies that are included in the relevant benchmark index.
As you can see, institutional investors own a fair amount of shares in RCI Hospitality Holdings. This shows that professional investors have a certain degree of credibility. But we can’t rely on that fact alone, because 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 quickly. So it’s worth looking at RCI Hospitality Holdings’ profit history, below. Of course, the future is what really matters.
Our data shows that hedge funds own 10% of RCI Hospitality Holdings. This caught my attention because hedge funds sometimes try to influence management or bring about changes that will create short-term value for shareholders. Looking at our data, we can see that the largest shareholder is ADW Capital Management LLC, with 10% of shares outstanding. Eric Langan is the second largest shareholder with 7.5% of common shares, while BlackRock, Inc. owns approximately 6.8% of the company’s shares. Eric Langan, the second largest shareholder, also happens to be the CEO.
Judging from the shareholder registration form, 50% of the shares are controlled by the top 23 shareholders, which means that no single shareholder has a majority interest in ownership.
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. There are a sizeable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.
Insider Ownership of RCI Hospitality Holdings
The definition of an insider may vary slightly between different countries, but members of the board of directors always matter. Company management is responsible for running the business, but the CEO will answer to the board of directors, even if he or she is a member of the board.
Most view insider ownership as a positive because it can show the board is well aligned with other shareholders. However, in some cases too much power is concentrated within this group.
We can report that insiders do own shares in RCI Hospitality Holdings, Inc. As individuals, insiders own a total of US$42m in this US$533m company. Some would say this shows an alignment of interests between shareholders and the board. But it might be worth checking if these insiders have been selling off shares.
general public ownership
The public – including retail investors – own 44% of the company, so it can’t be ignored. While this size of ownership may not be enough to influence policy decisions in their favor, they can still have a collective impact on company policy.
private company ownership
Our data shows that private companies own 4.3% of the company. Maybe it’s worth looking into this more deeply. If related parties, such as insiders, have an interest in one of the private companies, this should be disclosed in the annual report. Private companies may also have strategic interests in the company.
Next step:
While it’s well worth considering the different groups that own a company, there are other factors that are even more important. Consider, for example, the ever-present specter of investment risk. We’ve spotted 3 warning signs Working with RCI Hospitality Holdings and understanding them should be part of your investment process.
If you’re like me, you might want to consider whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
Note: Figures for this article are calculated using data from the past 12 months, that is, the 12-month period ending on the last day of the month on which the financial statements are dated. This may not be consistent with the full year annual report data.
Valuation is complex, but we’re helping to make it simple.
Find out if RCI Hospitality Holdings is potentially overvalued or undervalued by checking out our comprehensive analysis, which includes Fair value estimates, risks and warnings, dividends, insider trading and financial health.
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This article from Simply Wall St is general in nature. We only use unbiased methodologies to provide commentary based on historical data and analyst forecasts, and our articles are not intended to provide financial advice. It does not constitute a recommendation to buy or sell any stock and does not take into account your objectives or your financial situation. Our goal is to provide you with long-term focused analysis driven by fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or qualitative information. Simply Wall St has no position in any of the stocks mentioned.
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