In this article, we take a look at billionaire Nelson Peltz’s top 5 stock picks as of the end of the first quarter of 2022. To read our discussion on the latest developments surrounding Peltz’s hedge fund, go directly to Billionaire Nelson Peltz’s Latest Portfolio: Top 7 Stock Picks.
5. The Wendy’s Company (NASDAQ:WEN)
Number of Hedge Fund Holders: 25
Nelson Peltz’s Trian Partners’ Holdings: $556,573,000
Percentage of Nelson Peltz’s Trian Partners’ Portfolio: 9.31%
Stock Price as of June 29: $18.92
The Wendy’s Company (NASDAQ:WEN) is a Dublin, Ohio-based fast-food chain holding company with over 7,000 restaurants globally.
In a note issued to investors on June 21, Alton Stump at Loop Capital revealed that the same-store sales for The Wendy’s Company (NASDAQ:WEN) have increased from 5% to 5.5% in the last four weeks as opposed to 3.5% to 4% during the first half of Q2 2022. This means that the comparable store sales are up 4% to 4.5% during the ongoing quarter, which is higher than the consensus estimate. The analyst has given Wendy’s Company (NASDAQ:WEN) stock a Buy rating with a target price of $26.
Nelson Peltz’s Trian Partners is the biggest shareholder in The Wendy’s Company (NASDAQ:WEN) as of Q1 2022. The hedge fund has shown its interest in acquiring Wendy’s and taking it private to improve operations, lower overheads, and boost shareholder returns. Trian Partners initiated a stake in The Wendy’s Company (NASDAQ:WEN) nearly two decades ago and helped the company to divest the Tim Hortons division. Following that, the investment firm aided the merger of Wendy’s with Arby’s in 2008.
As of Q1 2022, 25 funds held a stake in The Wendy’s Company (NASDAQ:WEN).
4. Sysco Corporation (NYSE:SYY)
Number of Hedge Fund Holders: 31
Nelson Peltz’s Trian Partners’ Holdings: $939,288,000
Percentage of Nelson Peltz’s Trian Partners’ Portfolio: 15.72%
Stock Price as of June 29: $85.30
Sysco Corporation (NYSE:SYY) is a Houston, Texas-based food distribution company that caters to the demand of restaurants. The company has a wide portfolio of products that comprises frozen meat and vegetables, bakery and dairy products, and paper and disposables. Sysco Corporation (NYSE:SYY) serves around 650,000 customers and is staging a comeback as economic activity is recovering after the pandemic.
On June 29, Jeffrey Bernstein at Barclays increased the target price on Sysco Corporation (NYSE:SYY) from $97 to $102 and reiterated an Overweight rating on the stock in a note issued to investors following a meeting with the management. The analyst considers Sysco Corporation (NYSE:SYY) as a solid pick at a time when concerns related to a recession are high, and investors are looking for defensive stocks.
Sysco Corporation (NYSE:SYY) was held by 31 hedge funds as of Q1 2022.
3. Janus Henderson Group plc (NYSE:JHG)
Number of Hedge Fund Holders: 28
Nelson Peltz’s Trian Partners’ Holdings: $1,116,010,000
Percentage of Nelson Peltz’s Trian Partners’ Portfolio: 18.68%
Stock Price as of June 29: $23.57
Janus Henderson Group plc (NYSE:JHG) is a London-based asset management company. Trian Partners is the biggest shareholder in Janus Henderson Group plc (NYSE:JHG). Nelson Peltz has been appointed to the Board of the company.
Janus Henderson Group plc (NYSE:JHG) has an attractive forward dividend yield of 6.29% as of June 29 and has recently approved a share buyback plan of $200 million to further boost shareholder returns. However, the firm is expected to face near-term headwinds due to outflows in a shaky market. On July 2, Janus Henderson Group plc (NYSE:JHG) was downgraded from Market Perform to Underperform by Michael Brown at Keefe Bruyette. The analyst also lowered the price target on Janus Henderson Group plc (NYSE:JHG) stock from $28 to $22.
Of the 912 hedge funds being tracked by Insider Monkey at the end of Q1 2022, 28 funds held a stake in Janus Henderson Group plc (NYSE:JHG).
2. Invesco Ltd. (NYSE:IVZ)
Number of Hedge Fund Holders: 22
Nelson Peltz’s Trian Partners’ Holdings: $1,404,885,000
Percentage of Nelson Peltz’s Trian Partners’ Portfolio: 23.52%
Stock Price as of June 29: $16.46
Invesco Ltd. (NYSE:IVZ) is an Atlanta, Georgia-based asset management firm with operations in 20 countries and around 8,000 employees. Invesco Ltd. (NYSE:IVZ) caters to the demands of retail and institutional funds. The company serves 70% institutional funds and 30% retail funds.
Invesco Ltd. (NYSE:IVZ) has a dividend yield of 4.6% as of June 29. The stock is currently trading at a price-to-earnings (P/E) multiple of 5x to 6x due to the slump in the stock price of the asset management firm, along with an anticipation of a decline in profitability. In the last decade, Invesco Ltd. (NYSE:IVZ) stock has traded at a P/E multiple of 10x to 12x. Despite the uncertainty, the company saw an inflow of more than $20 billion during Q1 2022, along with an increase in market share for exchange-traded funds (ETFs).
Invesco Ltd. (NYSE:IVZ) was held by 22 hedge funds as of Q1 2022.
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.
