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Thomas Finser

 
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  • A Long-Term Value Case For Wendy's, Part III [View article]
    Please re-check your store count data from the K. WEN net store count up every year since '09. For '12, planning on 20 new corporate + 40 NA franchise + 55 international. Franchisee base will consolidate as the big get bigger. Also, share buybacks not material with IA in play. Furthermore, Trian will hit the 32.5% ownership cap under Delaware law (unless they go for the whole enchilada). Commodity costs show up in restaurant margins as seen in the K.
    Oct 28 12:25 PM | 1 Like Like |Link to Comment
  • A Long-Term Value Case For Wendy's, Part III [View article]
    Again, WEN is a massive system with thousands of stores around the world. Given the scale and scope of operations, I lend more credence to national Zagat ratings. Sure they have hundreds of lagging stores...but this is the opportunity or the "low-hanging fruit". Furthermore, as seen in the June IR day, "A" rated stores increased from 6.4% in '09 to 25.3% today. On the low-end, "C" rated stores decreased from 40.9% in '09 to 11.7% today. So they've made progress in the past few years with great momentum going forward.
    Oct 28 11:55 AM | 2 Likes Like |Link to Comment
  • A Long-Term Value Case For Wendy's, Part III [View article]
    All good questions. Please see Part II where I address some of these concerns. Nobody expects IA to happen overnight--especially the market. We agree on competition. As discussed in Part I, the market is bifurcating and WEN is addressing this. Keep in mind, the bulk of NAV is powered by the franchise annuity. The co-owned store assets are priced for distress as mentioned above.

    In reference to the Peltz concern, would you mind adding some detail? You mentioned "stick it out for the long haul". What's the downside scenario you see with Peltz going forward? Also, please double-check your facts on Trian fees in the recent 14A.

    Thanks again for taking the time to read my article. Please keep me posted on IA stores for OH. Would very much appreciate your thoughts.
    Oct 27 10:33 PM | 2 Likes Like |Link to Comment
  • A Long-Term Value Case For Wendy's, Part III [View article]
    Thanks for bringing up an interesting point. The market gave up long ago for the reason you mentioned. Please see Part II for some detail on the catalysts. Investor fatigue will be discussed in greater detail next week. However, it's the marginal rate of change relative to market expectations that must be examined. WEN is priced for permanent operational disappointment.
    Oct 27 12:11 PM | 1 Like Like |Link to Comment
  • A Long-Term Value Case For Wendy's, Part III [View article]
    Thanks. Strategic decision to cut corners on food? This was discussed in Part I. They (WEN) continue to outrank other mega QSRs on food as seen in the Zagat data.
    Oct 27 11:31 AM | 4 Likes Like |Link to Comment
  • A Long-Term Value Case For Wendy's, Part III [View article]
    Thanks for mentioning MHGU. I mentioned these guys in Part II and agree this company looks interesting. They were among the first large franchisees to embrace IA. This idea probably deserves a write-up.
    Oct 27 11:25 AM | 1 Like Like |Link to Comment
  • A Long-Term Value Case For Wendy's, Part III [View article]
    Thank you John. From the Pacific Management perspective, do you see any leading indicators that IA stores are delivering on the quality value promise? What, if any, leading indicators should investors monitor that might otherwise fall below the radar screen? Thanks again for taking the time to comment.
    Oct 26 03:30 PM | 1 Like Like |Link to Comment
  • A Long-Term Value Case For Wendy's, Part II [View article]
    Thank you for the thoughtful response. I will answer some of your points on valuation and Image Activation mix in Part III, due next week. I'm currently traveling abroad while typing on an iPad that autocorrects in Spanish. So here are a few brief follow ups. However, there are a few assumptions we need to re-visit in the meantime.

    1. Please double check your franchise revenue estimate of $80m in the recent K. With NPV, assumptions such as as initial cash flow base, discount rate and terminal value, are important.

    2. As I will show in Part III, the bulk of NAV is in non-restaurant operations. Cutting though all the noise, WEN is a franchise annuity backstopped by significant real estate holdings that, so happens to own 1,400 stores. Hence the "toll road". Setting the co owned stores aside for a minute, you disagree a well-established franchisor with over 5,000 retail units is "toll road"?

    3. I agree the market needs a more nuanced approach to Image Activation. Again, look at the impact on NAV, especially co owned units. This is not a top-line story. It's about operating leverage relative to consensus expectations embedded in current EV.

    4. Completely agree on breakfast concerns. They've disappointed with breakfast since 1985. However breakfast is not material to NAV.

    I have not addressed your concerns about leverage, related party transactions or the JCP and Emil link. Again, some of this will be discussed next week and in future articles. I strongly urge you to check the franchise revenue assumptions and play with IA operating leverage for co-owned stores.
    Oct 20 08:31 PM | Likes Like |Link to Comment
  • A Long-Term Value Case For Wendy's, Part II [View article]
    Thank you. I don't have any particular insight into MHGU. It could be a pure-play on the success of Image Activation at WEN. I find it interesting this franchisee is outperforming the parent company stock price YTD.
    Oct 19 12:57 AM | Likes Like |Link to Comment
  • A Long-Term Value Case For Wendy's, Part I [View article]
    Thanks Austin. My comment was in reference to another post that was deleted. On P/E, I will address the valuation questions in Part III. Thanks for following and appreciate feedback.
    Oct 17 08:33 PM | Likes Like |Link to Comment
  • A Long-Term Value Case For Wendy's, Part II [View article]
    Thanks Jorge. Trian just pulled in another $1bn in funds. The war chest is there. Speculation all over the place with this one and would not get too caught up in rumors...especially after the buzz last year http://nyti.ms/PCPzAk Would you mind sharing your source? Who's speculation $5 and on what basis have they reached this valuation? I hope to shed some light on possible valuations in the upcoming article.
    Oct 17 07:21 PM | 1 Like Like |Link to Comment
  • A Long-Term Value Case For Wendy's, Part I [View article]
    Thanks for the feedback. Working to spell out more abbreviations in the following articles.
    Oct 16 11:37 PM | Likes Like |Link to Comment
  • A Long-Term Value Case For Wendy's, Part I [View article]
    Thanks for the comment. Ditto for me. Was on the verge of blowing out of WEN in June. However, I always like to check and double check my reasons for selling. Often the puke point is just the time to be adding. My guess is we're not the only ones. How many PMs with quarterly benchmarks have sold out or lost interest after the last few years? This is the reason for writing. Will address the time-horizon in the following articles.
    Oct 16 11:29 PM | Likes Like |Link to Comment
  • A Long-Term Value Case For Wendy's, Part I [View article]
    I will address part of this point in Part III. For now, I would look at WEN as a franchise royalty biz first...which is a "toll road". 2Oyr contracts, massive switching cost and 4% of monthly sales. Hundreds of self-employed entrepreneurs who use the WEN business process, trademarks and purchasing systems must pay the franchisor. On a micro level, I agree there's competition for the consumer dollar. However, the franchise business is the major driver of current NAV as I hope to explore in the following articles.
    Oct 16 11:22 PM | Likes Like |Link to Comment
  • A Long-Term Value Case For Wendy's, Part I [View article]
    Thanks for the Q. Both BKW and MCD use hybrid cooking methods...pre-made components, warming drawers, some microwave for BKW, and some grilling. Here's a link that might help http://bit.ly/OGtRKn
    Oct 16 11:02 PM | Likes Like |Link to Comment
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