After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of December 31st. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards The Wendy’s Company (NASDAQ:WEN).
Is WEN stock a buy? The best stock pickers were getting more optimistic. The number of long hedge fund bets inched up by 4 lately. The Wendy’s Company (NASDAQ:WEN) was in 31 hedge funds’ portfolios at the end of December. The all time high for this statistic is 37. Our calculations also showed that WEN isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 27 hedge funds in our database with WEN holdings at the end of September.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Nelson Peltz of Trian Partners
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we heard that billionaire Peter Thiel is backing this biotech stock. So, we are taking a closer look at this space. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind we’re going to take a look at the fresh hedge fund action encompassing The Wendy’s Company (NASDAQ:WEN).
Do Hedge Funds Think WEN Is A Good Stock To Buy Now?
At the end of December, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards WEN over the last 22 quarters. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
The largest stake in The Wendy’s Company (NASDAQ:WEN) was held by Trian Partners, which reported holding $583.7 million worth of stock at the end of December. It was followed by Arrowstreet Capital with a $116.3 million position. Other investors bullish on the company included Two Sigma Advisors, D E Shaw, and Horizon Asset Management. In terms of the portfolio weights assigned to each position Trian Partners allocated the biggest weight to The Wendy’s Company (NASDAQ:WEN), around 8.64% of its 13F portfolio. Empirical Capital Partners is also relatively very bullish on the stock, setting aside 1.83 percent of its 13F equity portfolio to WEN.
There weren’t any hedge funds initiating brand new positions in the stock during the fourth quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as The Wendy’s Company (NASDAQ:WEN) but similarly valued. We will take a look at Brixmor Property Group Inc (NYSE:BRX), Power Integrations Inc (NASDAQ:POWI), Nextera Energy Partners LP (NYSE:NEP), New York Community Bancorp, Inc. (NYSE:NYCB), Pinnacle Financial Partners (NASDAQ:PNFP), Virtu Financial Inc (NASDAQ:VIRT), and Allison Transmission Holdings Inc (NYSE:ALSN). This group of stocks’ market valuations are closest to WEN’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BRX | 6 | 23694 | -12 |
| POWI | 17 | 109029 | -3 |
| NEP | 32 | 293709 | 10 |
| NYCB | 25 | 244102 | -3 |
| PNFP | 13 | 59770 | -9 |
| VIRT | 27 | 227716 | 1 |
| ALSN | 25 | 609196 | -5 |
| Average | 20.7 | 223888 | -3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.7 hedge funds with bullish positions and the average amount invested in these stocks was $224 million. That figure was $1062 million in WEN’s case. Nextera Energy Partners LP (NYSE:NEP) is the most popular stock in this table. On the other hand Brixmor Property Group Inc (NYSE:BRX) is the least popular one with only 6 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 82.2. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th and beat the market again by 1.5 percentage points. Unfortunately WEN wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on WEN were disappointed as the stock returned -0.4% since the end of December (through 4/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
