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Jason Knapp

Sorry Ronald, Wendy's Is the Better Pick...Special Situation Investing News - 9/4/2015

I usually enjoy the write-ups in Barron's Stock Alert column. Yesterday was no exception when its authors published a solid article about the fast food chain The Wendy's Company $WEN. Not only is Wendy's my family's go-to fast food restaurant if we have to eat that stuff (it blows the doors off of Mickey D's $MCD & Burger King $QSR), it's stock is likely to turn out to be a great investment over the next year as well.

A one-year chart of $WEN (blue) vs. the S&P 500 (red) (click to enlarge)

As you can see, the recent selloff in the markets has not been kind to Wendy's stock.  That's bad news if you have been a shareholder over the past year, but great news if you don't own the stock yet but are considering buying it.

This is the Special Situation Investing News, so there obviously has to be some sort of catalyst or event that will cause Wendy's stock to rise.  The catalyst here is the continued selling off of company-owned stores to franchisees. Franchising is great for restaurant chains because the asset-light franchise business model provides much higher returns on invested capital than physically owning stores.  As an added bonus, companies that are converting from a company-owned to a franchised format get a nice infusion of cash as they sell locations off that they can use to buy back stock, or make some other shareholder-friendly move.  This sort of conversion often serves as a catalyst that drives restaurants' stock prices significantly higher.

Wendy's transition from 22% company-owned stores in 2012 to 13% today was a major contributing factor to the 90% rise in its stock over the same period. Wendy's has set a goal to lower its percentage of company-owned stored to only 5% by 2016. If the transition provides even half the move in the stock that it did the last time this happened investors will be jumping for joy.

Wendy’s Is Set to Sizzle: Shares Undervalued 30%


And Now for the rest of the Special Situation Investing News:


Cree spinoff Wolfspeed to play major role in N.C. State's PowerAmerica

Cree Decides Light Speed Is Too Slow, Goes Right To Wolfspeed For Power & RF Spinoff

Ventas spinoff Care Capital Properties $CCP acquires skilled-nursing facilities for $210 million

Bayer to List Polymer Business Covestro in 4th Quarter I.P.O.

Ferrari Spinoff Set to Hold Up Marchionne's Fiat-GM Merger Plan

Baxalta Shows Rare Deal Discipline

The Fat Lady Has Sung On Baxalta’s Ariad Chase



Buyout barons like the sound of a blank check

Pleasant Lake Partners Boosts Del Taco


Thrift Conversions aka Demutualizations

Not Much to See Here -- Except Profits


Merger Arb

Columbus McKinnon Completes Acquisition of Magnetek

Syngenta Moves to Calm Disappointed Shareholders

Orbitz: High-Risk Arb Opportunity Worth Closer Look After Tuesday Sell-Off


REIT Conversion

MGM REIT Conversion By Year End?

Investment Write-Ups

SunEdison: Cash to the Rescue

RBC Bearings: Gaining Speed With Sargent

PIMCO High Income Fund - Next Stop, NAV

4 REIT Gems That Mr. Market Is Ignoring

Interesting Event Driven idea: Calgon Carbon: SCOTUS Decision Overreaction Creates A Buying Opportunity

General Electric: Alstom Deal Approval Could Be A Positive Catalyst For GE's Stock

Distressed Preferred Stocks Part 2: Fannie Mae

Interesting. Berkshire Hathaway Nears Buybacks Levels

Valeant: A Detailed Look Inside a Dangerous Story Well Told – PART IV: The IRR Fallacy

Voss' Canadian Small Cap Software Trifecta


Activist Investors

MUST READ: Meet Patrick Walsh, The Do-It-Yourself Hedge Fund Activist You've Never Heard Of

Jana Partners target Qualcomm thinking of selling Vuforia augmented reality unit

Voss Issues Open Letter to the Board of Blucora

On Sale: Buy This Credit Card Processor Cheaper Than Ubben's ValueAct Capital

Becker Drapkin Throws Support Behind Fuel Systems Solutions

Big happenings at Starboard Value target LSB Indistries $LXU. CEO steps down. This has to be a positive for this den of nepotism.

Sessa Capital Pushes Back On Ashford Hospitality Prime

Ashford Hospitality Upgraded on Sale Prospects

Activist Investing Daily: The Tom Sandell Show?

Bill Ackman target Mondelez Shareholders Could Win Big if Company Cuts Costs


Whale Watching

Philip Falcone, Former Head of Vast Fund, Tries a 3rd Act

Charter: John Malone’s Return to The US Cable Industry | Punch Card Investing

Battered Hedge Fund Fave SunEdison Jumps As CEO Promises Cash Flow By Year’s End

Hedge fund reinsurers hit by recent financial market volatility

Ackman's Pershing Square hedge fund drops 9.2 percent in August

On Sale: You Can Buy Dan Loeb's Latest $2 Billion Bet at an 8% Discount


Other Investing News

Newcastle Announces Completion of $157 million Golf Debt Repurchase @ 90% of par

Mr. Market certainly likes this one, $BGS +12.8%. General Mills selling Green Giant to B&G Foods for $765 million

HP seeks to sell cyber security unit TippingPoint

“Supersize” Fracking Could Keep Natural Gas Prices Low For Years

Puerto Rico Power Authority’s Deal With Creditors Lifts Some Shares

‘Star Wars’: A Force for Disney, Hasbro and Target


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Have a great weekend! 

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