Is it smart to be bullish on The Wendy’s Company (NASDAQ:WEN)?
If you were to ask many of your peers, hedge funds are perceived as delayed, outdated financial vehicles of a period lost to current times. Although there are more than 8,000 hedge funds trading today, Insider Monkey looks at the masters of this club, about 525 funds. It is widely held that this group controls the lion’s share of all hedge funds’ total assets, and by paying attention to their highest quality investments, we’ve come up with a few investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here).
Equally as useful, bullish insider trading activity is another way to look at the financial markets. Just as you’d expect, there are lots of motivations for a corporate insider to get rid of shares of his or her company, but just one, very clear reason why they would behave bullishly. Several empirical studies have demonstrated the impressive potential of this tactic if shareholders understand where to look (learn more here).
Thus, we’re going to study the recent info for The Wendy’s Company (NASDAQ:WEN).
Hedge fund activity in The Wendy’s Company (NASDAQ:WEN)
At the end of the second quarter, a total of 21 of the hedge funds we track were long in this stock, a change of 40% from the first quarter. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were upping their holdings considerably.
Out of the hedge funds we follow, Nelson Peltz’s Trian Partners had the most valuable position in The Wendy’s Company (NASDAQ:WEN), worth close to $483.9 million, accounting for 9.5% of its total 13F portfolio. The second largest stake is held by Mason Hawkins of Southeastern Asset Management, with a $204.1 million position; the fund has 1% of its 13F portfolio invested in the stock. Some other hedgies that are bullish include Murray Stahl’s Horizon Asset Management, D. E. Shaw’s D E Shaw and Jonathon Jacobson’s Highfields Capital Management.
As one would understandably expect, particular hedge funds were breaking ground themselves. Trian Partners, managed by Nelson Peltz, created the most outsized position in The Wendy’s Company (NASDAQ:WEN). Trian Partners had 483.9 million invested in the company at the end of the quarter. Mason Hawkins’s Southeastern Asset Management also initiated a $204.1 million position during the quarter. The following funds were also among the new WEN investors: Murray Stahl’s Horizon Asset Management, D. E. Shaw’s D E Shaw, and Jonathon Jacobson’s Highfields Capital Management.
What have insiders been doing with The Wendy’s Company (NASDAQ:WEN)?
Bullish insider trading is at its handiest when the company we’re looking at has experienced transactions within the past 180 days. Over the latest six-month time frame, The Wendy’s Company (NASDAQ:WEN) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).
We’ll also take a look at the relationship between both of these indicators in other stocks similar to The Wendy’s Company (NASDAQ:WEN). These stocks are Arcos Dorados Holding Inc (NYSE:ARCO), Brinker International, Inc. (NYSE:EAT), Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL), The Cheesecake Factory Incorporated (NASDAQ:CAKE), and Bloomin’ Brands Inc (NASDAQ:BLMN). This group of stocks belong to the restaurants industry and their market caps are similar to WEN’s market cap.
