Tracking Nelson Peltz's Trian Fund Management Portfolio - Q2 2022 Update

Aug. 23, 2022 10:06 PM ETFERG, GE, IVZ, JHG, MDLZ, PG, SYY, UL, UN, UNLVF, UNLYF, WEN2 Comments
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John Vincent
21.97K Followers

Summary

  • Nelson Peltz’s 13F portfolio value decreased from $5.97B to $4.55B this quarter. The number of positions remained steady at 8.
  • Trian Fund Management decreased Sysco and almost eliminated Mondelez International during the quarter.
  • The top three positions are Ferguson plc, Invesco Ltd, and Janus Henderson Group plc. They add up to ~67% of the portfolio.

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This article is part of a series that provides an ongoing analysis of the changes made to Nelson Peltz's 13F portfolio on a quarterly basis. It is based on Peltz's regulatory 13F Form filed on 8/12/2022. Please visit our Tracking Nelson Peltz's Trian Fund Management Portfolio article for an idea on his investment philosophy and our last update for the fund's moves during Q1 2022.

This quarter, Peltz's 13F portfolio value decreased ~24% from $5.97B to $4.55B. The number of holdings remained steady at 8. The top three holdings are at ~67% of the 13F stock portfolio: Ferguson plc, Invesco Ltd, and Janus Henderson Group plc. To know more about activist investing, check out Deep Value: Why Activist Investors and Other Contrarians Battle for Control of Losing Corporations.

Note: Trian Fund has a 1.5% ownership stake in London listed Unilever PLC (UL). The activist position was acquired in January and Nelson Peltz was appointed to the board on May 31st.

New Stakes:

None.

Stake Disposals:

None.

Stake Increases:

Ferguson plc (FERG): FERG is currently the largest position in the portfolio at ~31%. It came about as a result of Ferguson's dual listing in NYSE in early March. Trian's position goes back to June 2019 when they acquired a ~6% ownership interest in Ferguson plc. The position was not in the 13F reports as they purchased the shares listed in London which is not in the realm of 13F reports. Their primary thesis was that Ferguson stock was mispriced due to it being listed in UK despite conducting all of its business in North America. There was a ~15% selling in H2 2021 at prices between ~$140 and ~$181. This quarter saw a similar increase at prices between ~$106 and ~$139. The stock currently trades at ~$120.

Note: They now control ~6% of the business.

Invesco Ltd. (IVZ): The ~20% IVZ stake was purchased in Q2 2020 at prices between $6.70 and $11.55. Next quarter saw the beneficial stake increased by roughly two-thirds at ~$11. Last two quarters also saw ~47% stake increase at prices between ~$18.50 and ~$26.50. The stock is now at $17.65. There was a minor ~3% increase this quarter.

Note: They control ~12% of the business.

General Electric (GE): The GE position is at 5.63% of the 13F portfolio. The stake was established in Q2 2015 and increased by ~83% the following quarter at an overall cost basis of ~$160. Q4 2015 saw a ~14% trimming at prices between ~$200 and ~$250. The stock currently trades well below their purchase price ranges at $76.10. There was a ~45% selling in Q3 2020 at ~$50. This quarter saw a marginal increase.

Note 1: GE stock had a 1-for-8 reverse stock split last August. The prices quoted above are adjusted.

Note 2: In October 2017, Trian won a board seat at General Electric. Soon after, long-time (16 years) CEO Jeff Immelt stepped down. John Flannery, the head of GE's healthcare unit was named as the new CEO. In October 2018, Larry Culp (formerly CEO at Danaher (DHR)) was named the CEO.

Stake Decreases:

Sysco Corporation (SYY): SYY is currently at ~16% of the portfolio. It was purchased in Q2 2015 at prices between $36 and $39 and increased by ~300% the following quarter at prices between $35.50 and $41.50. Recent activity follows. The position was reduced by ~25% in Q4 2018 at ~$66.30 and by another ~18% in Q2 2019 at around the same price. The last seven quarters have seen another ~64% selling at prices between ~$55 and ~$89. The stock currently trades at $85.28. They are realizing gains.

Mondelez International (MDLZ): The original MDLZ stake was from Q4 2012 when over 19M shares were purchased in the mid-20s price-range. The following quarter saw a stake-doubling in the low-30s price-range. There was a ~55% selling in Q1 2018 at prices between $40.50 and $46. Q1 2020 saw a ~15% trimming at ~$58 and that was followed with a ~23% selling in Q3 2020 at around the same price. Q1 2021 saw another ~25% selling at ~$56 per share. Next two quarters also saw a ~15% reduction at ~$62 per share. Q4 2021 saw the stake sold down to a minutely small position at prices between ~$58 and ~$66. The stock currently trades at $63.72. The remainder stake was almost eliminated this quarter.

Note: Following their stake establishment in 2012, Trian pushed Mondelez for a merger with PepsiCo (PEP) but that did not pan out. In early 2014, Peltz acquired a board-seat in a compromise agreement with Mondelez. In March 2018, Nelson Peltz left the board and was replaced by Trian's president Peter May.

Kept Steady:

Janus Henderson Group plc (JHG): JHG is currently the third-largest position at ~17% of the portfolio. It was established in Q2 2020 at prices between ~$14 and ~$26. Next quarter saw the stake doubled at ~$20 average cost-basis. There was another stake doubling over the last four quarters at prices between ~$30 and ~$48. The stock currently trades at $24.93.

Note: Trian Fund controls ~19% of the business. Nelson Peltz and Ed Garden were appointed to Janus Henderson Group's board on February 1st.

Wendy's Company (WEN): The Wendy's stake goes back to 2005 when Trian Fund Management was founded. The position has fluctuated over the years. Recent activity follows. There was a ~14% reduction in Q2 2017 at $15.97 and that was followed with a similar reduction in Q1 2018 at ~$16.50. There has been minor trimming since. The stock currently trades at $20.10. The position is now at ~11% of the 13F portfolio.

Note 1: Family trusts connected to Trian also own shares of Wendy's. Including those, the total ownership is at ~42M shares (~18% of the business).

Note 2: In December 2015, Matthew Peltz was added to Wendy's board. Nelson Peltz is the Chairman of the Board (non-executive chairman since June 2007).

Procter & Gamble (PG): The PG stake was established in Q4 2016 at prices between $82 and $90. Q1 2017 saw a huge ~5x stake increase at prices between $83.50 and $92. There was a two-thirds selling in Q2 2020 at ~$115 per share. The five quarters through Q3 2021 had seen another ~50% reduction at prices between ~$121 and ~$145. Next quarter saw the stake almost sold out at prices between ~$139 and ~$164. The stock currently trades at ~$147.

Note: In July 2017, Trian launched a proxy fight for a board seat at P&G and termed P&G's business culture a "suffocating bureaucracy". A whitepaper soon followed proposing a re-organization under a "lean holding company" structure: a) beauty, grooming and healthcare; b) fabric and home care; and c) baby, feminine and family care. Trian narrowly lost the proxy battle, but P&G still appointed Peltz to the company's board. In June 2019, Peltz indicated his reorganization plan is "under very serious consideration" by the company's board. A reorganization plan followed in November.

The spreadsheet below highlights changes to Peltz's 13F stock holdings in Q2 2022:

Nelson Peltz - Trian Fund's Q2 2022 13F Report Q/Q Comparison

Nelson Peltz - Trian Fund's Q2 2022 13F Report Q/Q Comparison (John Vincent (author))

This article was written by

John Vincent profile picture
21.97K Followers
Focused on cloning strategies by analyzing 13F reports of a curated set of around fifty super-investors and generating Absolute Returns thru exploiting inefficiency, volatility, and momentum.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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