Wendy’s International Inc [Wen]

Wendy’s International Inc [Wen] – Brief Article

In the wake of favorable 4Q and February results, many analysts have taken a second look at Wendy’s. Some have even upgraded the issue. Wendy’s February U.S. same-store sales rose 4.1%, while sales of Tim Hortons, Canada’s largest coffee and fresh baked goods chain (acquired by Wendy’s in ’95) increased 9.1% over the same period. If the year has thus far been good to Wendy’s, the company’s stock hasn’t fared nearly so well, falling nearly 30%, largely in sympathy with the lagging restaurant sector. Insiders seem to agree that now is the time to acquire shares. From February 15 through February 28, eleven insiders acquired a combined 150,025 shares, including 141,500 shares on the open market at prices ranging from $15.88 to $17.39 per share.

Senior Chairman, Co-Founder Tim Hortons Division Ronald Joyce purchased 92,500 shares, marking his first-ever acquisition. Joyce last sold 115,000 shares back in May ’97 when the stock was trading only a few points higher at $23. It is encouraging to see Joyce putting nearly 60% of the cash received from his past sale back into the stock. Director James Pickett, a filer since ’82, bought 20,000 shares. This was Pickett’s largest-ever transaction (his last previous was a 1,000-share purchase back in ’93) and increased his holdings by nearly a third. President, COO Tim Hortons Division Paul House purchased 10,000 shares. This was the first-ever transaction for House, a filer since ’95. SVP, Wendy’s Restaurants ofCanada Brion Grube exercised options to acquire 8,525 shares. Grube last acquired 2,000 shares in November’99, but had until then been inactive since ’94. And while the options were setto expire later in the year, expiring or not, it is encouraging that he did not sell the shares acquired though the ex ercise. Lastly, co-founder, interim CEO, and company spokes-man Dave Thomas purchased 10,000 shares. This is Thomas’ first-ever acquisition, he has been a perrenial seller, with the most recent coming in May’99. It is important to note that almost all options held by insiders are underwater, making open-market purchases the only means to acquire shares.

While uncertainty remains regarding Wendy’s vacant CEO position, the company appears to be in good hands with Sr. Chairman and co-founder Dave Thomas at the helm. In fact, given Wendy’s past management issues, patience in selecting the right successor might actually be a positive. The purchases by these directors could indicate the board’s enthusiasm regarding the selection process. It most certainly supports the growing Street buzz surrounding the company. Wendy’s is engaged primarily in the business of operating, developing and franchising a system of fast-food restaurants including both the Wendy’s and Tim Hortons concepts.

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