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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 (NYSE: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 (NYSE:CBS) , MGM Resorts International (NYSE:MGM), and United States Oil Fund L.P. (NYSEARCA: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

KFT

609872

New

-3%

TIFFANY & CO NEW

TIF

398967

0%

-13%

WENDYS ARBYS GROUP

WEN

388479

0%

-4%

LEGG MASON INC

LM

368791

0%

-19%

FAMILY DOLLAR STORES

FDO

325355

0%

-1%

STATE STREET CORP

STT

277004

164%

-26%

DOMINOS PIZZA INC

DPZ

151440

New

6%

HEINZ H J CO

HNZ

109082

0%

-3%

SPDR S & P 500 ETF PUTS

SPY

59387

96%

-11%

CONSOL ENERGY INC

CNX

33921

New

-7%

CORELOGIC INC

CLGX

22497

New

-32%

PEETS COFFEE AND TEA INC

PEET

17310

-34%

-4%

LYONDELLBASELL

LYB

6028

New

-16%

CHARTER COMM

CHTR

2828

New

-10%

LIN TV CORP

TVL

2715

27%

-42%

ISTAR FINANCIAL INC

SFI

2675

154%

-14%

BELO CORP

BLC

2184

107%

-31%

SPDR GOLD TRUST

GLD

1986

New

26%

LAS VEGAS SANDS CORP

LVS

1688

-41%

7%

TIME WARNER CABLE INC

TWC

1639

New

-18%

ISTAR FINANCIAL INC CALL

SFI

811

0%

-14%

C B S CORP NEW

CBS

 

Sold Out

-18%

M G M RESORTS CALL

MGM

 

Sold Out

-22%

UNITED STATES OIL FUND L P

USO

 

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 ((NYSEARCA: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.

Source: Trian Fund's Favorite Stock Picks