Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards The Wendy’s Company (NASDAQ:WEN) to find out whether there were any major changes in hedge funds’ views.
The Wendy’s Company (NASDAQ:WEN) was in 33 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 37. WEN has seen an increase in enthusiasm from smart money lately. There were 30 hedge funds in our database with WEN positions at the end of the second quarter. Our calculations also showed that WEN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
David Siegel of Two Sigma Advisors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind let’s review the key hedge fund action regarding The Wendy’s Company (NASDAQ:WEN).
Do Hedge Funds Think WEN Is A Good Stock To Buy Now?
At third quarter’s end, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 10% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in WEN over the last 25 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Trian Partners was the largest shareholder of The Wendy’s Company (NASDAQ:WEN), with a stake worth $549.2 million reported as of the end of September. Trailing Trian Partners was Arrowstreet Capital, which amassed a stake valued at $79.7 million. Citadel Investment Group, Two Sigma Advisors, and Horizon Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Trian Partners allocated the biggest weight to The Wendy’s Company (NASDAQ:WEN), around 6.83% of its 13F portfolio. Franklin Street Capital is also relatively very bullish on the stock, designating 1.03 percent of its 13F equity portfolio to WEN.
As industrywide interest jumped, specific money managers have been driving this bullishness. Point72 Asset Management, managed by Steve Cohen, assembled the biggest position in The Wendy’s Company (NASDAQ:WEN). Point72 Asset Management had $11.7 million invested in the company at the end of the quarter. Jack Woodruff’s Candlestick Capital Management also made a $7.9 million investment in the stock during the quarter. The other funds with brand new WEN positions are Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management, Jinghua Yan’s TwinBeech Capital, and Graham F. Smith’s Franklin Street Capital.
Let’s now review hedge fund activity in other stocks similar to The Wendy’s Company (NASDAQ:WEN). These stocks are C3.ai, Inc. (NYSE:AI), Sterling Bancorp (NYSE:STL), The Chemours Company (NYSE:CC), National Fuel Gas Company (NYSE:NFG), Adaptive Biotechnologies Corporation (NASDAQ:ADPT), Dada Nexus Limited (NASDAQ:DADA), and Blackstone Mortgage Trust Inc (NYSE:BXMT). This group of stocks’ market caps are closest to WEN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AI | 24 | 199056 | -5 |
| STL | 17 | 252247 | 1 |
| CC | 38 | 548945 | 14 |
| NFG | 19 | 152900 | 7 |
| ADPT | 25 | 1775850 | -2 |
| DADA | 13 | 106594 | -5 |
| BXMT | 15 | 182001 | 3 |
| Average | 21.6 | 459656 | 1.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.6 hedge funds with bullish positions and the average amount invested in these stocks was $460 million. That figure was $950 million in WEN’s case. The Chemours Company (NYSE:CC) is the most popular stock in this table. On the other hand Dada Nexus Limited (NASDAQ:DADA) is the least popular one with only 13 bullish hedge fund positions. The Wendy’s Company (NASDAQ:WEN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WEN is 74.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately WEN wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on WEN were disappointed as the stock returned -4.5% since the end of September (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Wendy's Co (NASDAQ:WEN)
Follow Wendy's Co (NASDAQ:WEN)
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Disclosure: None. This article was originally published at Insider Monkey.
