Since the beginning of the week, two well-known restaurant chain operators have seen their insiders buy their stock. As insider purchases can be interpreted as bullish signals, we will take a closer look at these transactions, and the hedge fund shareholders in each company, in order to elucidate if they stand as interesting investment options.
The first company in this list is The Wendy’s Co (NASDAQ:WEN), a $3.1 billion market cap quick service restaurants operator in the U.S. and several other countries around the world, known for its square burgers. On April 15th, Scott R. Toop, Senior Vice President, General Counsel and Secretary, acquired 10,080 shares of the company. He paid $8.37 per share for the first 7,580, and $8.38 per share for the remaining 2,500. Following these transactions, the SVP holds 59,580 shares of the company, worth about half a million dollars.
In addition to Mr. Toop, about 20 major hedge funds hold long positions in the stock. Amongst them, we can count Nelson Peltz’s Trian Partners, the largest institutional sponsor, which owns more than 83 million shares; Murray Stahl’s Horizon Asset Management, with 26.4 million shares; and Mason Hawkins’ Southeastern Asset Management, with 11 million shares. Other big names worth mentioning are Jim Simons, D. E. Shaw, Joel Greenblatt and Ken Griffin.
The other restaurant operator in this list is Ruby Tuesday, Inc. (NYSE:RT). Although it is much smaller than Wendy’s (its market cap barely surpasses $429 million), insiders and hedge funds are also betting on its future. Last Monday, April 14th, Donald Hess, Board Director, started a position with 50,000 shares, for which he paid an average price of $6.849 per share, having spent more than $340,000 in stock.
Furthermore, it is not only Mr. Hess that is betting on the company. All five of the firm’s largest hedge fund shareholders either increased their stakes or started a new position in the stock over the last reported quarter. Let’s take a look at them (sorted by amount of shares held):
Chuck Royce’s Royce & Associates holds 1,45 million shares, and most recently increased its stakes by 11%. Sahm Adrangi’s Kerrisdale Capital, Michael Zimmerman‘s Prentice Capital Management, and Michael Pollack‘s Destrier Capital, all recently started positions in the stock, with 384,656 shares, 256,498 shares, and 219,721 shares, respectively. Finally, Jim Simons‘ Renaissance Technologies upped his bets by 21%, to 163,423 shares.
With both insiders and major hedge funds feeling bullish about these stocks, should you too?
Disclosure: Javier Hasse holds no position in any stocks mentioned