Trian Fund Hopes to Restore Shine to Tiffany

Activist investor Nelson Peltz took advantage of the falling stock of Tiffany & Co. (TIF) and bought a further 3.6 million shares of the luxury retailer on Tuesday and last Friday, Alexander Eule reports in Barron's Insider Scoop. Peltz's Trian Fund Management now owns 7.9% of the company. Tiffany's stock fell 11% last week following the company's announcement of a 2% drop in same-store sales for the holiday period, and a lowered 2007 forecast.

Trian, which first disclosed an activist Tiffany position in February 2007, made its latest purchases at an average price of $35.58 per share, according to a Wednesday filing with the Securities and Exchange Commission. The newly disclosed investment, which also includes a 100,000 share purchase in mid-December, came at a total cost of $132 million. All told, Trian added 3.7 million shares to its Tiffany's position.

Like the firm's other notable investments, including Wendy's International (WEN) and H.J. Heinz (HNZ), Trian's Tiffany stake was filed with the SEC in a manner that allows Peltz to engage management and take an activist role with the company. Such a filing is classified as a Schedule 13D.

Trian had a previously disclosed holding of 5.2% in Tiffany's, but had yet to make nominations for the retailer's board. "It's been one of his less active investments," according to Ken Squire, founder of research and consulting firm 13D Monitor. This may now change, and as Eule points out, Peltz's investments do make a turn for the better:

Wendy's and Heinz have fared better since Peltz declared an activist role at both companies, where Trian has managed to gain board representation. Shares of Wendy's and Heinz are up 38% and 22%, respectively, from Trian's average cost, according to Squire.

Tiffany's overseas sales were more robust than its domestic sales, the company reported last week. European performance increased at a net 18%, and by a remarkable 30% in Asian-Pacific countries. However this failed to impress the market. Maybe Peltz's golden touch can do the trick: Tiffany's stock closed up 3.7 percent Wednesday.

See Tiffany's SEC 13D filing.