Murray Stahl’s Horizon Kinetics has reported a position of over 23 million shares in The Wendy’s Company (NASDAQ:WEN), giving it ownership of 6% of the company. Our database of 13F filings shows that the fund only owned 1.3 million shares of the quick service restaurant at the end of the third quarter of 2012, so Stahl and his team have been buying the stock over the last four months. See more stock picks from Horizon Kinetics. Wendy’s has risen 9% year to date, after having been down in 2012 against a rising market.
The Wendy’s Company recently surprised the Street by reporting 8 cents per share in earnings for the fourth quarter of 2012 (as opposed to expectations of 4 cents per share). Revenue was also up, though only slightly. While the trailing earnings multiple is still very high, annualizing a figure of 8 cents per share yields a P/E of 16 which is actually fairly reasonable. That would be well above analyst consensus, which currently projects 18 cents per share this year and 20 cents per share in 2014. Those figures imply high multiples for the current year and on a forward basis, but we would expect that targets will be moved up in light of the recent earnings beat. We’d also note that Wendy’s pays a dividend yield of 3.1%- likely not high enough to consider it on pure income terms, but potentially a plus for investors.
Billionaire Nelson Peltz’s Trian Partners is a major shareholder in The Wendy’s Company, with 83 million shares in its portfolio at the end of September. This made Wendy’s one of the activist hedge fund’s five largest positions by market value (find more of Peltz’s favorite stocks). Southeastern Asset Management slightly increased its stake to close to 35 million shares; that fund is managed by Mason Hawkins. D.E. Shaw, a large hedge fund managed by billionaire David Shaw, was also buying Wendy’s during the third quarter (check out more stocks D.E. Shaw was buying).
We also looked at other restaurant stocks: