Billionaire Nelson Peltz Dumps Legg Mason (LM), Tiffany (TIF); Boosts Top Holdings

Founded in 2005 by Nelson Peltz, Peter May and Ed Garden, Trian Partners manages more than $13 billion worth of assets and is one of the most famous activist investment firms in the world. Mr. Peltz and his team tend to focus on consumer, industrial and financial companies, in particular conglomerates, and maintain a very concentrated equity portfolio. The fund’s U.S. equity portfolio totaled just seven long positions on June 30, that carried a market value of $10.5 billion, with consumer staples stocks accounting for three of the seven holdings, while two positions were claimed by stocks from the industrial sector.

One of the most noteworthy moves made by the fund during the quarter was the unwinding of its stake in Legg Mason Inc (NYSE:LM), a company that Mr. Peltz and his team helped turn around. We’ll take a look at that, plus another position that was closed during the quarter, as well as detail the fund’s top-three positions at the end of June.

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Has Tiffany Lost Its Shine?

We’ll kick things off with Tiffany & Co. (NYSE:TIF), one of Trian Partners’ oldest positions, but one which the fund exited during the second quarter, disposing of the 14,260 shares that it had held on March 31. According to the Wall Street Journal, the stock returned approximately 60% while Trian Partners was invested in it. Tiffany & Co. (NYSE:TIF)’s recent woes are part of an industry-wide slump that saw 2015 sales fall by 3%, while operating margins declined as well. As a result, shares were recently changing hands at a forward P/E multiple of 17, one of the stock’s lowest valuations ever. Still, the company managed to deliver solid free cash flow, providing a sturdy foundation for its annual dividend of $1.60 per share, which provides investors with a 2.4% yield. Harris Associates, run by Natixis Global Asset Management, reduced its stake in Tiffany & Co. (NYSE:TIF) by 4% to 4.57 million shares valued at $277 million during the second quarter.

Out With The Old

Legg Mason Inc (NYSE:LM) is another stock that Nelson Peltz and his team said goodbye to during the second quarter. According to its 13F filing, Trian Partners dumped the 11 million shares that it had ownership of on March 31. Nelson Peltz first became interested in Legg Mason in 2009 and went on to join the company’s Board of Directors. He stepped down in 2014 after he managed to push for a major managerial change in 2012 that helped the company put to turn around investor outflows. So far this year, Legg Mason Inc (NYSE:LM)’s stock has been wobbling around without a clear direction, and is currently down by 11% for the year. In its most recent quarterly report, the company posted net income of $33.5 million, or $0.31 per share, down by 65% year-over-year, though topping analysts’ projections of $0.25 per share. Veteran fund manager Bill Miller, who ran the $1.3 billion Legg Mason Opportunity Trust, has announced his departure from the firm amid weak results.

Turn the page to take a look at Trian’s top holdings heading into the third quarter.

Still Hungry For What Mondelez Is Cooking

Now we’ll take a look at some of Trian’s bullish moves and first up is Mondelez International Inc (NASDAQ:MDLZ), Trian’s third-most valuable position at the end of June. During the second quarter, the fund acquired 3,740 shares of the company, lifting its tally to 48.03 million shares worth an estimated $2.18 billion. When Nelson Peltz first took a position in Mondelez International Inc (NASDAQ:MDLZ), he said PepsiCo, Inc. (NYSE:PEP) could benefit greatly from taking over the company. Although a merger did not come to fruition, speculation about a potential bid has resurfaced after Mondelez’s recent $23 billion bid for Hershey Co (NYSE:HSY) was promptly dismissed, as some traders believe this was a move to entice a buyout offer for Mondelez itself. In the second quarter, Mondelez International Inc (NASDAQ:MDLZ) managed to stave off currency headwinds with a mix of higher volumes and prices in some markets. The company posted adjusted earnings of $0.35 per share and $6.46 billion in revenue, the latter figure down by 17% year-over-year.

Still Bullish On Sysco

Trian Partners’ stake in SYSCO Corporation (NYSE:SYY) was increased by roughly 1% during the quarter, amassing 43.9 million shares valued at $2.23 billion at the end of the period. Nelson Peltz became involved with the food distribution giant in August 2015, becoming its largest shareholder and immediately gaining two Board seats. SYSCO Corporation (NYSE:SYY) has had a stellar year so far, as it’s currently up by 32%. The company released its fourth quarter of fiscal year 2016 results earlier today, posting adjusted earnings of $0.64 per share, topping analysts’ forecasts of $0.61. Revenue came in at $13.65 billion, just shy of analysts’ consensus target of $13.71 billion. Although sales were weaker than expected, the company said its efforts to keep costs low have helped bolster its quarterly profit. Donald Yacktman and his fund, Yacktman Asset Management, chose to cut their exposure to SYSCO Corporation (NYSE:SYY) during the second quarter, reducing their stake by 15% to 14.8 million shares.

GE Is Golden

General Electric Company (NYSE:GE) has maintained its status as Trian’s top dog, after the fund added 521,321 shares to its position during the second quarter, taking it to 74.7 million shares worth $2.35 billion. In an interview in July, Mr. Peltz said that GE is “great long-term investment,” stating that the company has “probably the best collection of industrial assets on the planet.” Mr. Peltz also said that he was happy with the way General Electric Company (NYSE:GE) CEO Jeff Immelt and his team have gone about turning the company around, stripping it of all of its financial assets and re-focusing its operations on the industrial sector. Currently up by 2.3% for the year, the stock took a tumble at the end of July after General Electric Company (NYSE:GE) released its second quarter results. Although it managed to surpass analysts’ estimates, the company faced reduced demand for locomotives and oil-field equipment amid global economic uncertainty. GE posted $33.3 billion in sales and earnings of $0.51 per share, helped by higher profits in its power and renewable energy businesses. Ken Griffin’s Citadel Investment hiked its GE stake by 1,648% during the second quarter, to 7.04 million shares.

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