Two trades went into the portfolio today.
One of them is a fast food company that cut its dividend by more than half this year and pulled its own full-year guidance.
43% of the float is sold short.
And I bought calls on it that don’t expire until January 2028.
I know how that sounds. But this name came off my list a while back, then came right back on, and the reason it came back is the reason I want you looking at it.
The second trade is a household name with a fat dividend, and I’m a lot less excited about that one. I’ll tell you why before you take it.
Wendy’s is the one with the 43% short interest.
Reuters reported Wednesday that Trian is putting a group of investors together to take the company private. BlueFive Capital and the Flynn Group, one of the longest tenured franchisees in the system, are among the names that may come in with them. A bid is expected in the coming weeks.
Nelson Peltz holds 16.24% of the company personally. Trian holds another 7.85%. The whole thing carries a market value around $1.44 billion.
The stock jumped as much as 15% on the news and got halted for volatility.
Retail is speculating on a deal somewhere between $12 and $17 a share, and I don’t see how it goes for less than $12 or $14 either.
The stock is a little over $8 per share.
And if the deal never happens, I think the easiest thing is Wendy’s just becomes a $13 stock again. It was $14 not that long ago and $18 at the start of 2025.
Then there is the short interest, which was 43.30% of the float as of Monday. It could squeeze quite easily. Don’t forget that part.
My target is $13.21.
I bought January 21, 2028 calls, the specific strike and price I paid for the calls is available to Ceres Club members.
I also picked up AT&T January 2028 calls on a much more modest target. That one is a slow grind, not a story, and I would not size it the same way.
One thing about how I entered these
If a stock happens to be at a near-term high, I only buy half as many as normal.
The stock keeps going up and I’m still long a call, just not as much of one. If it pulls back somewhat, I get a chance at a cheaper entry.
Buying the very top is not my favorite thing to do, no matter what.
Both of these are in the portfolio now, with the strikes, the limit prices and the targets, and I post every adjustment I make as I make it.
If you want the portfolio and the tool I use to find these setups, sign up for the Ceres Club today.
Andrew Giovinazzi