Trian Fund Management, L.P. (“Trian Partners”) was founded by Nelson Peltz, Peter May and Ed Garden in November 2005. Trian Partners focuses on investing in undervalued and under-performing companies and it works closely with the management team of those companies to increase shareholders value. Its chief executive, Nelson Peltz, went to the Wharton School of the University of Pennsylvania, and has experience in the senior management teams of many other firms.
In February 2011, Trian Partners offered to buy out Family Dollar Stores (FDO) for $55 to $60 per share in cash, valuing FDO at nearly $7.6 billion. However, the bid was rejected by FDO, saying it substantially undervalued the company. Trian still holds about 6 million shares of FDO stocks in its portfolio. Another main investor in FDO is Pershing Square. It initiated a 11 million share position in FDO during second quarter. Bill Ackman talked about his investment thesis at the Ira Sohn Conference (read Ackman's entire speech).
Trian sold out three of its largest positions during the second quarter: CBS (CBS) , MGM Resorts International (MGM), and United States Oil Fund L.P. (USO). The decision seems to be correct because all three stocks suffered from losses (from 10% to 22%) since June.
Nelson Peltz's top positions at the end of June
Company | Ticker | Value (x1000) | Activity | Return Since June |
KRAFT FOODS INC | 609872 | New | -3% | |
TIFFANY & CO NEW | 398967 | 0% | -13% | |
WENDYS ARBYS GROUP | 388479 | 0% | -4% | |
LEGG MASON INC | 368791 | 0% | -19% | |
FAMILY DOLLAR STORES | 325355 | 0% | -1% | |
STATE STREET CORP | 277004 | 164% | -26% | |
DOMINOS PIZZA INC | 151440 | New | 6% | |
HEINZ H J CO | 109082 | 0% | -3% | |
SPDR S & P 500 ETF PUTS | 59387 | 96% | -11% | |
CONSOL ENERGY INC | 33921 | New | -7% | |
CORELOGIC INC | 22497 | New | -32% | |
PEETS COFFEE AND TEA INC | 17310 | -34% | -4% | |
LYONDELLBASELL | 6028 | New | -16% | |
CHARTER COMM | 2828 | New | -10% | |
LIN TV CORP | 2715 | 27% | -42% | |
ISTAR FINANCIAL INC | 2675 | 154% | -14% | |
BELO CORP | 2184 | 107% | -31% | |
SPDR GOLD TRUST | 1986 | New | 26% | |
LAS VEGAS SANDS CORP | 1688 | -41% | 7% | |
TIME WARNER CABLE INC | 1639 | New | -18% | |
ISTAR FINANCIAL INC CALL | 811 | 0% | -14% | |
C B S CORP NEW |
| Sold Out | -18% | |
M G M RESORTS CALL |
| Sold Out | -22% | |
UNITED STATES OIL FUND L P |
| Sold Out | -10% |
The large positions of Trian performed better than the S&P 500 index since the end of second quarter. Trian initiated a brand new $610 million position in Kraft Foods during the second quarter. The stock lost 3% but outperformed the SPY by 8 percentage points. Warren Buffett and Bill Ackman are among the prominent investors with large KFT positions (check out Warren Buffett's top stock picks).
Trian’s other large positions include Tiffany & Co., Wendys Arbys Group, Legg Mason and Family Dollar Stores Inc. These stocks all suffered losses but they still outperform the SPY by 1% on a weighted average basis. Other hedge fund managers, like Horseman Capital Management and Capital Growth Management, also hold large positions of TIF (check out Ken Heebner’s top stock picks).
The large increases in positions include State Street Corp/ and SPDR S&P 500 ETF Trust Puts (SPY). Trian increased its holdings by 164% and 96%, respectively. However, STT lost 26%, more than double of the loss of the SPY. On the other hand, Trian gained about 10% from SPY Puts from the 11% loss of the index. Like Trian, several other hedge funds, such as Hayman Advisors and Marathon Asset Management, also have large positions in SPY Puts (see Kyle Bass’ top stock picks).
We like Nelson Peltz and his stock picks for the Trian Partners hedge fund. His top stock picks performed better than the market during the past two months. We believe investors may be able to beat the market over the long term by imitating Nelson Peltz's top stock picks.
Disclosure: I am long SPY.
