This article is part of a series that provides ongoing analysis of changes to Nelson Peltz’s 13F portfolio on a quarterly basis. It is based on the Peltz regulation Form 13F filed on 11/12/2021. Please visit our Nelson Peltz Trian Fund Management Portfolio Tracker article to get an idea of his investment philosophy and our Last update for fund movements during the second quarter of 2021.
This quarter, the value of Peltz’s 13F portfolio decreased by about 6%, from $8.55 billion to $8.04 billion. The number of holdings remained stable at 9. The three main holdings represent around 49% of the 13F stock portfolio: Ferguson PLC, Comcast and Sysco Corporation. To learn more about activist investing, see Deep Value: Why Activist Investors and Other Opponents Fight for Control of Losing Companies.
Note: It was announced in March 2019 that Nelson Peltz had joined Aurora Cannabis (ACB) as a strategic advisor. He resigned last September.
Sale of interests:
Janus Henderson Group plc (JHG): JHG represents ~12% of the portfolio position established in Q2 2020 at prices between ~$14 and ~$26. The following quarter, participation doubled to about $20 average cost. There has been a roughly 45% increase in stake over the past two quarters at prices between ~$32 and ~$44. The stock is currently trading at $47.60.
Note: Regulatory filings since the end of the quarter show that they hold 24.6 million shares (14.43% of activity). This is compared to the 23.7 million shares in the 13F report. The increase occurred at ~$41.50.
General Electric (GE): GE’s position is ~5% of the 13F portfolio. The stake was established in the second quarter of 2015 and grew by approximately 83% the following quarter at an aggregate cost of approximately $160. Q4 2015 saw a decline of around 14% at prices between ~$200 and ~$250. The stock is currently trading well below its buy price range at around $107. There was a ~45% sell off in Q3 2020 at around $50. Peltz realized losses. Recent quarters have seen a marginal increase.
Note 1: GE stock went through a 1 for 8 reverse split in August. The prices indicated above are adjusted.
Note 2: In October 2017, Trian won a seat on the board of General Electric. Shortly thereafter, longtime (16-year-old) CEO Jeff Immelt stepped down. John Flannery, the head of GE’s healthcare unit has been named the new CEO. In October 2018, Larry Culp (former CEO of Danaher) was named CEO.
The bet decreases:
Ferguson PLC (FERG): FERG is currently the largest position in the portfolio at ~22%. It arose following Ferguson’s double listing on the NYSE at the start March. TrianeThe position dates back to June 2019 when they acquired an approximate 6% stake in Ferguson PLC. The position was not in 13F reporting as they bought the London listed shares which is not in 13F reporting. Their main thesis was that the Ferguson stock is mispriced because it is listed in the UK despite conducting all of its business in North America. The stock has doubled since their purchase and is currently trading at around $158. This quarter saw a cut of around 3%.
Comcast Corporation (CMCSA): CMCSA represents a large (top three) ~14% of the portfolio position established in Q2 2020 at prices between $32.50 and $43. The following quarter saw the stake more than double at prices between ~$39 and ~$47. This was followed by a roughly 27% stake increase in Q4 2020 at prices between ~$41 and ~$52. The stock is currently trading at $53.38. Recent quarters have seen only minor adjustments.
Sysco Corporation (SYY): SYY is currently the third largest position with around 13% of the portfolio. It was bought in the second quarter of 2015 at prices between $36 and $39 and rose around 300% the following quarter at prices between $35.50 and $41.50. Recent activity follows. The position was reduced by around 25% in Q4 2018 at around $66.30 and another around 18% in Q2 2019 at around the same price. Over the past four quarters, an additional ~45% has sold at prices between ~$55 and ~$86. The stock is currently trading at $76.43. They make gains.
Procter & Gamble (PG): PG’s 9.16% stake was established in the fourth quarter of 2016 at prices between $82 and $90. The first quarter of 2017 saw a huge ~5x stake increase at prices between $83.50 and $92. There was a two-thirds sale in the second quarter of 2020 at around $115 per share. The last five quarters have seen another reduction of around 50% at prices between ~$121 and ~$145. The stock is currently trading at around $147.
Note: In July 2017, Trian launched a proxy fight for a seat on the P&G board of directors and called P&G’s corporate culture “stuffy bureaucracy.” A white paper soon followed proposing a reorganization under a “lean holding company” structure: a) beauty, beauty care and healthcare; (b) fabrics and home care; and c) baby, feminine and family care. Trian narrowly lost the proxy battle, but P&G still named Peltz to the company’s board. In June 2019, Peltz indicated that his reorganization plan was being “very seriously considered” by the company’s board of directors. A reorganization plan followed in November.
Wendy’s Company (WEN): Wendy’s involvement dates back to 2005 when Trian Fund Management was established. The position has fluctuated over the years. Recent activity follows: there was a ~14% reduction in Q2 2017 to ~$15.97 and this was followed by a similar reduction in Q1 2018 to ~$16.50. There have been slight adjustments since. This quarter saw a ~5% cut to ~$23. The stock is currently trading at $21.94. The position is now at 6.83% of the 13F portfolio.
Note 1: Family trusts related to Trian also own shares of Wendy’s. Including these, total ownership is approximately 42 million shares (~18% of the company).
Note 2: In December 2015, Matthew Peltz was added to Wendy’s Board of Directors. Nelson Peltz is the chairman of the board of directors (non-executive chairman since June 2007).
Mondelez International (MDLZ): MDLZ represents 5.78% of the position of the 13F portfolio. The initial stake was in the fourth quarter of 2012, when over 19 million shares were purchased in the mid-20s price range. The following quarter saw a stake double in the 30s price range. There was a sale of around 55% in the first quarter of 2018 at prices between $40.50 and $46. The first quarter of 2020 saw a reduction of around 15% to around $58 and this was followed by a sale of around 23% in the third quarter of 2020 at around the same price. Q1 2021 saw another ~25% sell at ~$56 per share. The last two quarters have also seen a reduction of around 15% to around $62 per share. The stock is currently trading at $62.85. They are reaping gains.
Note: Following the establishment of their stake in 2012, Trian pushed Mondelez to merge with PepsiCo, but this did not go through. In early 2014, Peltz acquired a seat on the board in a compromise deal with Mondelez. In March 2018, Nelson Peltz left the board and was replaced by Trian Chairman Peter May.
Invesco Ltd. (IVZ): The 11.88% stake in IVZ was purchased in the second quarter of 2020 at prices between $6.70 and $11.55. The next quarter saw beneficial stake increase by around two-thirds to ~$11. The stock is now at $26.11. There has been a marginal increase in the last two quarters.
Note: Approximately half of the increase (~8.7 million shares) in Q3 2020 was through call options expiring 10/25/2023. Overall, their participation is around 10%.
The spreadsheet below highlights changes to Peltz’s 13F stock holdings in Q3 2021:
Source: Jean-Vincent. Data constructed from Trian Fund Management‘s 13F filings for Q2 2021 and Q3 2021.