Getting Hungry at McDonald's

Updated from 12:02 p.m. EDT

With its turnaround story getting a little stale, signs emerged Friday that upside-hungry investors fancy a value meal at McDonald's (MCD).

The same activist hedge fund that recently scored a big win at Wendy's (WEN), Pershing Square Capital, recently bought a 4.9% stake in the world's largest burger chain, according to Bloomberg News.

Pershing, based in New York and managed by well-known investor Bill Ackman, bought the stake over the last few months, a person familiar with the situation told Bloomberg. The hedge fund, whose stake is just below the 5% threshold that necessitates disclosure with the Securities and Exchange Commission, is the second-largest McDonald's shareholder behind mutual fund shop Cox & Dodge.

"Based on McDonald's business performance, shareholders have demonstrated continued confidence in McDonald's management and strategic direction," said McDonald's spokesperson Anna Rozenich. "Beyond that, we have no specific information on the extent or form of Pershing Square Capital's position in McDonald's."

Representatives of Pershing Square couldn't immediately be reached. Meanwhile, McDonald's shares were recently up $1.24, or 3.9%, to $34.69, making them by far the biggest gainer on the Dow Jones Industrial Average.

Pershing Square scored a triumph this summer when Wendy's agreed to sell part of its Tim Hortons doughnut chain and authorized a $1 billion share buyback, sending its stock up 12% to an all-time high on July 29. The concessions followed months of browbeating by Pershing, which owned a little more than 9% of Wendy's stock.

McDonald's shares have been pinned around $30 for more than a year after doubling between March 2003 and November 2004. The company, a chief competitor of Wendy's, has some fat to trim of its own, according to Buckingham Research analyst Mark Kalinowski.

Shortly after Wendy's sold off Tim Hortons, Kalinowski published a research note calling for McDonald's to sell off its Chipotle and Boston Market subsidiaries, saying, "We believe that McDonald's has powerful additional incentive to consider some strategic actions of its own."