Bill Ackman's Investment Thesis: Wendy's

Bill Ackman Wendy's Analysis Disclosure: None

Comments

[AlexNorthCa...:]

On 13 inch monitor, the font is way too small.

2008 Dec 12 08:02 AM

[Short Bus:]

Looks fine on my three LG Flatron widescreen 22 inch monitors.

Seriously "User281129", do you think anyone cares that you can not read it ?

2008 Dec 12 08:06 AM

[User 283977:]

Todd... Wendy's food is poor, their service is poor, and their price is high.... They compete against three power house companies in the California market, McDonalds, Jack in the Box, and In and Out. They are by far at the bottom of that group of companies.

With respect to their Real Estate, I have wondered about the logic of their site location model for some time... They are often not located in high traffic areas.

Wendy's can't manage itself, never the less, another company, particularly one that is also having problems. I would say managements first goal would be to fix Wendys.

2008 Dec 12 10:38 AM

[fatcat:]

Pretty interesting presentation...whats your take on it,Todd? Are you thinking of taking a position??

2008 Dec 12 11:00 AM

[User 109087:]

why is it trading at $4+ when he says it is worth $35 per share

2008 Dec 12 03:11 PM

[Joe Public:]

Locally, Wendy's mystifies me. A year or two ago, there was some major problem with the franchisee for the entire metro St. Louis area, and all Wendy's closed in a several county area. I don't know how many stores that was... maybe 50? They are still closed. It seems to me that it would be a priority for Wendy's to reopen in this major market, but nothing seems to be happening. Maybe that says something about Wendy's management, or maybe it doesn't. I don't know, but I thought it was worth mentioning.

2008 Dec 12 04:54 PM

[Robert Nabloid:]

Wendy's management was really lame. First it bought Tim Hortons. Tim Hortons represented a large portion of Wendy's profit. Then Wendy's thought it should just issue a $1 billion bond from Tim Hortons and then sell off Tim Hortons.

Did Wendy's make some money on that deal? Of course. But it was short sighted. They could have kept it and been a much more profitable organization, year in and year out. Stupid. Tim Hortons is a cash generating giant.

2008 Dec 12 06:05 PM

[User 283977:]

I vaguely remembered something about Wendy's, so I investigated.
Wendy's merged with Arbbys in April 2008. I forgot about that.

I looked at the current S&P report for Wendy's. According to the S&P
Wendy's fair value calculation is $2.10. The presentation says the stock is worth $50 per share. The current stock price is $4.28. That's quite a spread...

Time will tell as to which source is correct, the presentation or
the market.

2008 Dec 14 05:36 PM

[somadude:]

Wher I am from Jack in the BOx is bottom of the barrel. MKds, I dont like hte food but hey do the business, BK is next,and we do not have ina nd out (wish we did). Anybody know anything about whataburger?


On Dec 12 10:38 AM Bob Lunn wrote:

> Todd... Wendy's food is poor, their service is poor, and their price
> is high.... They compete against three power house companies in the
> California market, McDonalds, Jack in the Box, and In and Out. They
> are by far at the bottom of that group of companies.
>
> With respect to their Real Estate, I have wondered about the logic
> of their site location model for some time... They are often not
> located in high traffic areas.
>
> Wendy's can't manage itself, never the less, another company, particularly
> one that is also having problems. I would say managements first goal
> would be to fix Wendys.
>

2008 Dec 31 10:42 AM

[Amouna:]

Interesting presentation. Foodwise, I would say that Wendy's is far down my list of picks. If I want quick funk food, I would go for MCD. No question!

However, I would give Bill Ackman the benefit of the doubt since I really think he is a smart investor who has a flair for golden opportunities. So, whether WEN is truly worth 50$ a share of just a fiver, this we will know with time and market sentiment. However, Bill was the guy who called it right about the subprime debacle too and challenged the AAA rating of MBIA, the once giant monoline insurer.

I wouldnt take any position for the moment in WEN, or a very small one and pay close look at the market reaction and their future revenues...

Jan 01 04:22 PM

[frankc@azte...:]

well, i took a small bite of the stock, and quite frankly i wish i would of bought more at that price, dont get me wrong, i love mcds to eat but for stock,who can afford mcds? besides, the food at wendys is not so bad at all, and dont forget the economy we live in, affordable prices from their dollar menu keeps some of the little money i have in my pocket..

i only bought 600 shares! should of bought like 2 thousand shares!

thanks!

Jan 06 08:12 PM

[Madacasto:]

Striking commentary above. I live in the town where Wendy's originated - Columbus, Ohio. Everyone here misses the well managed Wendy's for the quality and cut above normal fast food burgers and fries, not to mention the Frostys, salads and value menu items (which they started, by the way). A goliath brand has been incredibly mismanaged for some time now.

The Tim Horton's endeavor was costly in it's support of this loss of focus. Their major stockholders and the Thomas (re: late founder Dave Thomas) family, not to mention a new formidable ownership and leadership team are committed to righting these wrongs and returning Wendy's to it's once solid position as the "quality among the crap" fast food restaurant. It appears well on it's way, and I've thankfully bet 2,893 shares on it, because it continues to rise and has shown amazing endurance in an otherwise volatile market.

These guys are committed to supporting investment in research and development, site location, marketing and product positioning. You'll know that they have righted the ship when you notice your local Wendy's quality improve and the stock price continue to rise.

Just so I can put some numbers behind my cheerleading: as of today's close of $5.33 (1/28/09), the stock price of WEN has risen 24.5% from the date of the release of this article (12/12/08 and $4.28). In the same period, the Dow has lost 3%. McDonald's has lost 2.3% in this period ($60.59 down to $59.20).

That's right - Wendy's is at $5.33 today and McDonald's is at $59.20.

Jan 28 04:37 PM

[allaroundguy:]

Good analysis of the valuation. Here's a quick analysis on how they recently restructured their bank agreement:

commentsoncredit.blogs...

Mar 16 11:32 AM