Prepared Remarks
Equity Investor, Macro Commentary
Wendy's seems to have more upside than downside because Peltz might bid $8 a share if he is willing to offer $7. x.comÂ
Wendy's has squeeze potential backed by real fundamentals: short interest is 30% of a small 160 million-share float, and its forward P/E is cheaper than Domino's, McDonald's and Cheesecake Factory. WallStreetBets is trying to squeeze it as it did Beyond Meat, but unlike Beyond, Wendy's has good fundamentals. x.comÂ
Wendy's prolonged sales weakness and rising food and labor costs threaten franchise survival, leaving the company near bankruptcy. Restaurant tracker John Gordon says it ranked in the bottom five of roughly 60 brands week after week for at least a year; promotions have not delivered a meaningful turnaround, and more closures are likely. Several franchisees say they are trying to sell to avoid bankruptcy; repeated lunch checks found 0-1 cars in the drive-through. x.com x.comÂ
Wendy's shorts are starting to cover because they can instead short AI trades such as SanDisk, Micron, Nebius and CoreWeave, some of which are up 4,000% over the past year. x.comÂ
Wendy's short exposure is larger than the reported short interest suggests, adding fuel for a squeeze. About 50.2 million shares, 30% of the float, were short at last report, and another 6.98 million shares are held in long puts, bringing effective short exposure to about 33% of a 170 million-share float. Caption Management leads in put exposure. x.comÂ
Wendy's is no longer worth holding after Trian said it has no plans to bid for the company at this time, per @wallstengine. x.comÂ
Wendy's stands to profit from rising US fast-food consumption, which will only continue. Fast-food stocks are surging, and Wendy's in particular has broken a multi-year downtrend aggressively. x.comÂ
Wendy's stock is now in much stronger hands after heavy volume cleared out the Stage 4 bagholders, leaving shorts fighting holders who are now in profit. With 350 million shares traded this week against a 170 million share float that is 30% shorted, shares have changed hands about three times already. x.comÂ
Wendy's fundamentals are falling apart, so the stock was never cheap even well off its highs. It has posted six straight quarters of falling same-store sales as smaller portions and higher prices erased the value proposition that defined the brand. Meritage Hospitality, the franchisee running 314 of its restaurants, just filed for Chapter 11 after its store-level earnings fell 48% last year. x.comÂ
Wendy's, Xerox and Icahn Enterprises are set up for a short squeeze. They are the only stocks with over 30% short interest that pay dividends above 7%, so shorts pay heavily to stay short and lose more if prices rise. All three are in Stage 2 uptrends, and Wendy's and Xerox are retesting recent high-volume breakouts. A short-covering summer could start if the market breaks higher out of its consolidation. x.comÂ