One of the great maxims of traders and Wall Street pros is to follow the "smart money."
I'm not much for the thesis that institutional shoppers tend to make smarter investing decisions, but many of you who've read my ruminations on insider buying say you'd also like to know how the Big Money is betting. Your wish is my command.
Next up: Wendy's/Arby's Group
Foolish facts
Metric |
Wendy's/Arby's Group |
---|---|
CAPS stars (out of 5) | *** |
Total ratings | 632 |
Percent bulls | 78.3% |
Percent bears | 21.7% |
Bullish pitches | 105 out of 128 |
Highest-rated peers | Kona Grill; Country Style Cooking; Dreams, Inc. |
Data current as of Nov. 24.
Wendy's/Arby's has a following among Foolish value investors who believe that a healthy dose of international expansion and takeover speculation will lead the stock higher.
"Recent news suggests that they are shifting their focus to international expansion, which is huge considering the success of Yum! Brands
Buybacks have stalled in the months since as Wendy's/Arby's management waits for activist owner Nelson Peltz, whose Trian Fund Management owns 18.3% of the shares outstanding, to decide whether to sell the stock outright or wait for an acquirer. (Peltz's team has received overtures from potential suitors, The Wall Street Journal reports.)
If he sells now, he won't be getting a full and fair price, some Fools argue. They have a point. According to Capital IQ, Wendy's/Arby's trades for just 0.88 times revenue and about the same multiple to the company's underlying book value.
Institutional-ownership history
Top Owners |
2007* |
2008* |
2009* |
Latest* |
---|---|---|---|---|
Southeastern Asset Management |
- |
18,146,008 |
25,136,597 |
27,087,000 |
BlackRock |
200,080 |
0 |
30,273,430 |
24,180,357 |
The Vanguard Group |
1,967,171 |
13,876,803 |
13,129,912 |
12,172,071 |
Wells Capital Management |
7,014,830 |
7,405,328 |
8,458,220 |
10,272,104 |
Passport Capital |
- |
- |
- |
8,120,000 |
TOP 25 TOTAL |
18,575,844 |
80,569,975 |
125,692,466 |
151,932,829 |
Source: Capital IQ, a division of Standard & Poor's.
*Indicates the number of shares owned.
Institutions think that's too cheap a price. How do I know? They've been buying in bulk for years and adding to their positions in every quarter since June 2009.
BlackRock has been the biggest buyer during that period. The legendary investment manager bought more than 30 million shares from June to December. Today, the company is the second-largest Wendy's/Arby's institutional shareholder, with just in excess of 24 million shares owned.
Competitor and peer checkup
Company |
Institutional Ownership |
Insider Ownership |
---|---|---|
McDonald's | 71.59% | 0.09% |
Panera Bread |
89.83% | 5.19% |
Sonic |
90.64% | 5.72% |
Wendy's/Arby's Group | 52.40% | 2.31% |
Yum! Brands | 77.12% | 0.44% |
Source: Capital IQ, a division of Standard & Poor's. Data current as of Nov. 24.
Judging solely on the basis of opportunity versus insider ownership, Wendy's/Arby's looks to be the most attractive play in this table. Why? For as active as they've been, Big Money buyers barely own a majority of the outstanding Wendy's/Arby's Group shares. Plenty of buying room remains.
Insiders are also engaged. Vice Chairman Peter May owns roughly 2% of the shares outstanding and has been building his position steadily throughout the year. I think he's right to do so, which is why I've picked the stock to outperform in my CAPS portfolio.
Now it's your turn to weigh in. Do you think the institutions are wrong about Wendy's/Arby's Group? Let us know what you think using the comments box below. You can also recommend other stocks for me to evaluate by sending me an email or replying to me on Twitter.
Interested in more info on Wendy's/Arby's Group? Add it to My Watchlist.