Editor’s Note: Related tickers: PepsiCo, Inc. (NYSE:PEP), Mondelez International Inc (NASDAQ:MDLZ), Tiffany & Co. (NYSE:TIF), State Street Corporation (NYSE:STT), Kraft Foods Group Inc (NASDAQ:KRFT),
Trian Partners, known for its activist ways, is a hedge fund founded and managed by Nelson Peltz, Peter May and Edward Gardner. The fund generally meshes a value-based approach with their activist positions, with over $2 billion in 13F capital at their disposal.
Recently, Peltz and his team have opened large positions in consumer-centric companies, namely PepsiCo, Inc. (NYSE:PEP) and Mondelez International Inc (NASDAQ:MDLZ). But first, let’s go over a bit of background on a couple of their other, more bearish moves. At Insider Monkey, we track the best of the best hedge funds, due to their market-beating potential if you know where to look; discover the secrets of piggybacking here.
Selling Tiffany and State Street
In Q1, Peltz and Trian sold a boatload of luxury jeweller Tiffany & Co. (NYSE:TIF). At the end of 2012, the fund reported ownership of a little over 1 million shares; on March 31,Trian held approximately 10,000 shares—a 99% decrease. Sitting here in mid-May, Tiffany & Co. (NYSE:TIF)’s stock price has surged 33% since the start of 2013, with shares currently trading at a little over $77 a pop. Tiffany & Co. (NYSE:TIF) is about as expensive as industry norms, with its trailing P/E(23.85) nearly equalling its peer group-average of 23.50, so it’s possible that Peltz doesn’t see a value opportunity here any longer.
Trian also sold shares of State Street Corporation (NYSE:STT), an investment management services provider that has its fair share of hedge fund bulls. Peltz’s move didn’t really come as much of a surprisethough, as Trian sold more than half their State Streetstakelast year, before cutting it by another 25% (qoq)in the first three months of 2013. Trian still owns 2.3 million shares, worth about $140 million, but we wouldn’t overlook his consistent selling behaviour. On the bright side, shares of State Street Corporation (NYSE:STT) now rest near $65 a share, significantly higher than their July 2012 high of $45.
Post-split Mondelez
On the flip side, Peltz went even longer on Mondelez International Inc (NASDAQ:MDLZ), the snacks and soft drinks producer, adding almost 21 million shares to their existing position. As of March 31, the total value of the 40 million Mondelez shares held by Trian was more than $1.2 billion. Mondelez International Inc (NASDAQ:MDLZ) was formally part of Kraft Foods Group Inc (NASDAQ:KRFT) and was spun off on October 1, 2012, when Trian began building its holding. Eight months later, the stock price has managed a modest 6% advance, with shares currently trading just above the $30 mark halfway through May.
Pepsi
Trian is also heavily invested is PepsiCo, Inc. (NYSE:PEP). Peltz and his colleagues started buying shares of the soft drink producer in the final quarter of 2012. As of the start of 2013, the fund reportedly owned 3.9 million shares and since then,they’ve upped their stake by more than 200%. As of its most recent 13F,Trian holdsover 12 million PepsiCo, Inc. (NYSE:PEP) shares, worth approximately $952 million. Since the start of the year, PepsiCo, Inc. (NYSE:PEP)’s stock price has risen by 23%;the company posted earnings of $0.77 per share and revenue of $12.6 billion during its latest quarter, surpassing Wall Street expectations. Analysts expect even stronger performance in the second quarter of 2013, so we’ll be watching closely.
Final thoughts
When Nelson Peltz’s stakes in consumer giants PepsiCo, Inc. (NYSE:PEP) and Mondelez International Inc (NASDAQ:MDLZ) were first disclosed earlier this year, many pundits believed that the activist investor would push for a merger by spinning off PepsiCo, Inc. (NYSE:PEP)’s Frito-Lay. It now appears that this was more the dream of a few wild typing financial journalists. Both companies face significant obstacles to a merger, not to mention that fact that Peltz’s stakes are still not large enough to cause significant changes.
Apart, both companies offer good value, and are bets on a recovering economy—a reasonable theme to drive these two forward. Similarly, the decisions to sell Tiffany & Co. (NYSE:TIF) and State Street seem to be driven by a lack of value, and unless there’s significant outperformance on the revenue/earnings front, it’s tough to see any massive appreciation from this luxury retailer and financial holding company any time soon.
Still, it’s also important to track Peltz and Trian’s remaining 13F holdings; check our fund-by-fund database on Insider Monkey for more info.
Disclosure: none
