bloggingbuyouts

When you look at the work of 13-D wielding activist investors, you usually find the following demands repeating themselves over and over:

• Try to sell the company to a private equity firm or strategic buyer.
• Buy back stock and/or pay a dividend.
• Get rid of the current management and/or board of directors.

The frequency of these requests has given many activists a reputation -- in my opinion largely undeserved -- as short-term oriented paper shufflers looking to pump up the stock price and move on.

Then there's Nelson Peltz, who focuses on that governance-oriented stuff too but is also unique in that he makes very specific comments about marketing: Wendy's isn't playing up its freshness in its advertising, Heinz's ketchup packets weren't good, Tiffany's was too focused on gifts, etc. This fascinating piece in Fortune looks at the investment methodology of this restaurant and branding expert.

Unfortunately, Mr. Peltz's publicly-traded company, Triarc (NYSE: TRY), has been a poor performer of late. But if you're sold on his ideas, it just might be a good time to take a look.

Nelson Peltz isn't too happy with Wendy's (NYSE: WEN), which quickly rejected two of his bids for the company, including a plan to combine Wendy's with Arby's, a fast-food chain owned by Triarc (NYSE: TRY), a company chaired by Mr. Peltz.

Normally I'm pretty sympathetic to the campaigns of activist investors but Peltz has a pretty poor record on corporate governance. During his proxy fight with Heinz back in 2006, the company responded to his calls for change with this: "Triarc received a corporate governance rating of 21.5, exceeding only 21.5% of all companies in the S&P SmallCap 600 and ranking it in the bottom quartile. Separately, Corporate Library gave Triarc an "F" on overall board effectiveness – the lowest possible rating."

So it appears that Peltz may not be walking corporate governance talk. But then again, Wendy's has also been a prodigious destroyer of shareholder value of late, so this is kind of like trying to decide between leaving the kids with Britney or K-Fed.

Wendy's International Inc. (NYSE: WEN) looks like it is about to have activists coming right up under its floors. Trian, Triarc Companies (NYSE: TRY), Nelson Peltz, Peter May, and others have all sent a letter according to an SEC Filing.

The activist group saw two separate proposals rejected within 24-hours, and it looks like the group is going to go after shareholders directly to garner up support. Wendy's is set to report earnings on April 25, and the activists have essentially said "don't do anything before that date."

What is interesting about this activist situation is that the valuations in the past were ugly and no one would have been able to "make shinola out of you know what" with where the stock was trading. It almost had a phantom premium associated with it merely because of activists and merely because it was "troubled" and in need of being fixed. But a serious pullback in a stock changes things.

So far, the board has been able to rebuff all outside efforts. There are many provisions the company has to defend itself, but things might be heating up quite a bit here.

Continue reading more detailed analysis at 247WallSt.com.