Browsing through the list of recent 13D filings is an exercise any investor with a greater-than-passing interest in stock market investing should do. For the few minutes it takes to look at the list, just one good idea a year makes the effort worthwhile.
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Sticking to Its Guns
Trian Fund Management continued to add to its stake in Wendy's (NYSE:WEN) and now owns 27% of the company. Interestingly, Wendy's has agreed to let Trian continue buying up to 32.5% of Wendy's shares. Wendy's shares trade for about $5.10 and continue to be a turnaround story. Yet Trian is sticking to its guns and is convinced that Wendy's will ultimately deliver shareholder value. Wendy's has been a laggard to say the least; over the past two years, shares are up 10%, while rival McDonald's (NYSE:MCD) has advanced by over 50%. Even the S&P 500 has advanced by over 20% during that time. After divesting the Arby's concept, Wendy's can now focus on its core brand, which the company is promoting heavily. Analysts are estimating 2012 EPS of 18 cents for 2012 followed by 24 cents a share in 2013. A lot can happen in the restaurant business in two years and with a long-term committed investor like Trian, Wendy's shares may be worth a bite.
It's also noteworthy to see what investors are disposing of, as a potential signal that the value story is no longer intact. Carl Icahn recently disclosed that his firm dumped over 4 million shares of Motorola Mobility (NYSE:MMI) at prices near $39 a share. Icahn still holds 26 million shares, but this a meaningful sale. Interestingly enough, MMI is trading near its 52 week high of $39.70, up almost 100% over last 52 weeks from its 52 week low. (For related reading, see Carl Icahn's Investing Strategy.)
Value investing firm Davis Select Advisors sold 5.2 million shares of data storage company Iron Mountain (NYSE:IRM), a meaningful sale thought it still leaves the firm holding over 30 million shares or 17.7% of the company. Given the large ownership interest, its too early to tell if this is a simple act of portfolio management or plans to exit the position. Given that IRM yields 3.3% and trades for about 15 times earnings, the company looks appealing given its consistent ability to generate cash flows year in and year out.
The Bottom Line
Whether the pros are adding or disposing of equity stakes in which they have a significant interest, individual investors can obtain some meaningful data amidst all the noise. Keeping tabs on such activities is one of the simplest, most effective ways of finding investment opportunities.
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At the time of writing, Sham Gad did not own shares in any of the companies mentioned in this article.