Hedge Funds Are Dumping Wendys Co (WEN)

Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.

Wendys Co (NASDAQ:WEN) was in 18 hedge funds’ portfolios at the end of September. WEN investors should pay attention to a decrease in support from the world’s most successful money managers of late. There were 19 hedge funds in our database with WEN holdings at the end of the previous quarter. At the end of this article we will also compare WEN to other stocks including The Geo Group, Inc. (NYSE:GEO), HSN, Inc. (NASDAQ:HSNI), and Acadia Realty Trust (NYSE:AKR) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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How are hedge funds trading Wendys Co (NASDAQ:WEN)?

At the end of the third quarter, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, down 5% from the previous quarter. On the other hand, there were a total of 24 hedge funds with a bullish position in WEN at the beginning of this year. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Trian Partners, led by Nelson Peltz, holds the largest position in Wendys Co (NASDAQ:WEN). According to regulatory filings, the fund has a $440.6 million position in the stock, comprising 4.3% of its 13F portfolio. The second largest stake is held by Eminence Capital, led by Ricky Sandler, which holds a $140 million position; 2.3% of its 13F portfolio is allocated to the company. Remaining members of the smart money that hold long positions include Murray Stahl’s Horizon Asset Management, Dmitry Balyasny’s Balyasny Asset Management and D. E. Shaw’s D E Shaw. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Now that we’ve mentioned the most bullish investors, let’s also take a look at some funds that said goodbye to their entire stakes in the stock during the third quarter. Interestingly, Israel Englander’s Millennium Management said goodbye to the largest stake of all the investors followed by Insider Monkey, totaling close to $10 million in stock. George Hall’s fund, Clinton Group, also cut its stock, about $8.6 million worth of Wendys Co (NASDAQ:WEN) shares.

Let’s now review hedge fund activity in other stocks similar to Wendys Co (NASDAQ:WEN). We will take a look at The Geo Group, Inc. (NYSE:GEO), HSN, Inc. (NASDAQ:HSNI), Acadia Realty Trust (NYSE:AKR), and Belden Inc. (NYSE:BDC). All of these stocks’ market caps match WEN’s market cap.

As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $105 million. That figure was a whooping $909 million in WEN’s case. Belden Inc. (NYSE:BDC) is the most popular stock in this table. On the other hand Acadia Realty Trust (NYSE:AKR) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Wendys Co (NASDAQ:WEN) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

Disclosure: None