Billionaire Nelson Peltz’s Latest Portfolio: Top 5 Stock Picks

1. Ferguson plc (NYSE:FERG)

Number of Hedge Fund Holders: 18

Nelson Peltz’s Trian Partners’ Holdings: $1,558,411,000

Percentage of Nelson Peltz’s Trian Partners’ Portfolio: 26.09%

Stock Price as of June 29: $113.95

Ferguson plc (NYSE:FERG) is a British-American repair, maintenance, and improvement (RMI) company. The company acts as a bridge between large-scale suppliers of heating and plumbing goods and professional customers.

Trian Partners is the second-biggest shareholder in Ferguson plc (NYSE:FERG) and owns more than 5.3% of the company’s outstanding shares. During Q1 2022, Trian Partners increased its stake in the company by 1%.

In a note issued to investors on June 16, Matthew Bouley at Barclays gave Ferguson plc (NYSE:FERG) stock a price target of $160 along with an Overweight rating. The analyst anticipates a broader slowdown in the residential market, but the company generates 56% of its revenue through the commercial market, which is more price inelastic. The rise in commodity prices due to the conflict between Russia and Ukraine will also play in favor of Ferguson plc (NYSE:FERG) as it will boost the company margins. Ferguson plc (NYSE:FERG) anticipates growing on the rebound experience during Q3 FY22 as it is more reliant on commercial markets, and its exposure in the residential market leans towards non-cyclical offerings.

Ferguson plc (NYSE:FERG) was discussed in the Q1 2022 investor letter of Cooper Investors. Here’s what the firm said:

“While we typically wouldn’t delve into huge detail around one 3-month period, since inception it has been fairly unusual for the Fund to underperform a weak market hence it is worth making some further comments regarding key drivers of the relative underperformance versus the Benchmark. Cyclicals – The Cyclicals owned in the portfolio tend to be focused businesses that are leaders in niche industries – Ferguson in plumbing and HVAC distribution. Our view is that the Cyclicals we own today exhibit significant value latency. With prices off 15-20% and ongoing earnings growth up 10-15% we own businesses today led by best-in-class management teams (and not dependent on commodity prices) that are roughly 30% cheaper than 3-6 months ago. An example is Ferguson which after the price fall combined with double digit earnings growth trades on around 14-15x next years earnings. During the quarter the business moved its primary listing to the US, where direct peers trade around 10 turns of multiple higher (Reece as a local comparative trades at ~30x). Ferguson carries almost no debt, and is returning 4-5% a year of cash to shareholders through dividends and buybacks.”

Overall, 18 hedge funds held a stake in Ferguson plc (NYSE:FERG) at the end of Q1 2022.

You can also take a peek at 10 Stock Picks of Alec Litowitz and Ross Laser’s Magnetar Capital and the Top 10 Stock Picks of Martin Whitman’s Third Avenue Management.

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