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 05/14/2021. 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 fourth quarter of 2020.
This quarter, the value of Peltz’s 13F portfolio increased by about 25%, from $6.76 billion to $8.46 billion. The number of stocks has increased from 8 to 9. The top three stocks represent around 52% of the 13F stock portfolio: Sysco Corporation, Ferguson plc and Procter & Gamble. 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.
Ferguson PLC (FERG): The top three ~19% of the portfolio’s stake in FERG is the result of Ferguson’s dual listing on NYSE in the early 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 is up about 50% since buying them and is currently trading around $130.
Sale of interests:
Invesco Ltd. (IVZ): The 11.30% stake in IVZ was purchased in the second quarter of 2020 at prices between $6.70 and $11.55. The next quarter, profit sharing increased by about two-thirds to about $11. The stock is now at $27.76. There was a marginal increase this quarter.
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%.
General Electric (GE): GE’s position is ~5% of the 13F portfolio. The stake was established in the second quarter of 2015 and increased by around 83% the following quarter at an overall cost in the 20s. and $31.50. The shares are currently trading well below their buy price ranges at $13.15. There was a ~45% sell off in Q3 2020 at around $6.20. Peltz realized losses. This quarter saw a marginal increase.
Note: 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:
Procter & Gamble (PG): PG’s first three approximately 14% stakes were 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 three quarters have seen around 18% selling at prices between ~$120 and ~$145. The stock is currently trading at around $138.
Note 1: Regulatory filings since the end of the quarter show that they own approximately 5.79 million shares of P&G. This is compared to ~8.88 million shares in the 13F report. The reduction occurred at an average price of approximately $135 per share.
Note 2: In July 2017, Trian launched a proxy contest 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, woman 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.
Mondelez International (MDLZ): MDLZ represents 6.49% of the position of the 13F portfolio. The initial stake dates back to the fourth quarter of 2012, when more than 19 million shares were purchased in the mid-20s price range. The following quarter saw a stake double in the $30 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. This quarter, about 25% more sold at about $56 per share. The stock is currently trading at $62.47.
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.
Sysco Corporation (SYY): SYY is currently the largest position with around 19% 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. The stock is currently trading at ~$84. The last quarter also saw a reduction of around 15%.
Note: On August 20, 2015, Sysco appointed Nelson Peltz and Josh Frank (a partner at Trian) to the company’s board of directors.
Comcast Corporation (CMCSA): CMCSA represents a large (top five) 12.71% of the portfolio position established in the second quarter of 2020 at prices between $32.50 and $43. The following quarter, the stake more than doubled at prices between ~$39 and ~$47. This was followed by a roughly 27% stake increase in the last quarter at prices between ~$41 and ~$52. The stock is currently trading at $55.46.
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. The stock is currently trading at $23.24. The position is now at 6.38% 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).
Janus Henderson Group plc (JHG): JHG represents approximately 6% of the established portfolio position in Q2 2020 at prices between ~$14 and ~$26. The following quarter, participation doubled to about $20 average cost. The stock is currently trading at $37.44. The last quarter saw a cut of around 7%.
Note: Regulatory filings from earlier this month show they beneficially own 20.60 million shares. This is compared to the 16.37 million shares in the 13F report. The increase is made through options whose net cost is between $32.50 and $36.50 per share.
The spreadsheet below highlights changes to Peltz’s 13F stock holdings in Q1 2021:
Source: Jean-Vincent. Data constructed from Trian Fund Management‘s 13F filings for Q4 2020 and Q1 2021.