Nelson Peltz may not want another proxy battle with E I Du Pont De Nemours And Co (NYSE:DD), but he doesn’t like to lose money either the influential activist investor said at an investment conference in New York today. Furthermore, the billionaire, who helms Trian Partners, said that losing the drawn-out proxy fight he had with the chemicals firm did major harm to investors.
“It has been a significant loss for shareholders. [The] stock has gone from $80 when I was on your show March 12th […] and the stock was $59 yesterday. But we haven’t sold our shares, that’s not our style, and we’re going to wait and watch and see what management and the board will do from here forward,” Peltz said. He also revealed that E I Du Pont De Nemours And Co (NYSE:DD) Chairman and CEO Ellen Kullman was in his office last week and that he told her, “The second least-favorite thing that I like to do is have another proxy fight, but the first least-favorite thing that I like to do is to see DuPont next year at this price.”
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Since their proxy fight, E I Du Pont De Nemours And Co (NYSE:DD)’s shares have lost about a fifth of their value, during which time Chemours Company (NYSE:CC) split from the company and began its own descent. Year-to-date, the stock has fallen by 20.46%, while in the last 12 months, the loss has been 8.13%. That is not to say that prominent investors have lost hope in the firm, however. Even Peltz, during said investment conference, did not discount the possibility that Trian may boost its share ownership in DuPont. Furthermore, the number of bullish hedge fund positions in the firm among those Insider Monkey tracks increased to 36 by the end of March, up by five from three months earlier. The total value of their holdings, however, paints a more bearish picture, as holdings owned by those still long in DuPont by the end of the first quarter declined by 6.48% quarter-over-quarter to $2.18 billion. The stock declined by 3.34% in the first quarter, and by a further 10.52% in the second quarter.
Why are we interested in the 13F filings of a select group of hedge funds? We use these filings to determine the top 15 small-cap stocks held by these elite funds based on 16 years of research that showed their top small-cap picks are much more profitable than both their large-cap stocks and the broader market as a whole. These small-cap stocks beat the S&P 500 Total Return Index by an average of nearly one percentage point per month in our backtests, which were conducted over the period of 1999 to 2012. Moreover, since the beginning of forward testing from August 2012, the strategy worked just as our research predicted, outperforming the market every year and returning 139% over the last 34 months, which is more than 80 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).
Furthermore, Insider Monkey tracks insider buying and selling of shares. This tells us whether insiders are also bullish on their firms’ shares. DuPont Director James Gallogly bought 3,000 shares and 14,250 shares of the firm on February 23 and May 18, respectively. Director Edward Breen bought 13,000 shares of the chemicals firm on February 23. On February 24, Director Lee Thomas acquired 1,245 shares, while on May 18, Director Lois Juliber acquired 1,000 shares. Meanwhile, Executive Vice President James Collins Jr. sold 600 shares each in two transactions on January 2 and February 2.
Considering all of this, let’s take a look at the fresh hedge fund activity concerning E I Du Pont De Nemours And Co.
Hedge fund activity in E I Du Pont De Nemours And Co (NYSE:DD)
The previously mentioned Trian Partners, managed by Nelson Peltz, holds the number one position in E I Du Pont De Nemours And Co (NYSE:DD) as of the end of the first quarter. Trian Partners had a $1.76 billion position in the stock in 24.56 million shares, comprising 20.5% of its 13F portfolio. Coming in second is Adage Capital Management, managed by Phill Gross and Robert Atchinson, which held a $98.1 million position in 1.37 million shares; the fund had 0.2% of its 13F portfolio invested in the stock. Some other peers that were bullish encompass Highfields Capital Management, John A. Levin’s Levin Capital Strategies, and Ken Griffin’s Citadel Investment Group.
Consequently, some big names were leading the bulls’ herd. The aforementioned Highfields Capital Management, led by Jonathon Jacobson, established the biggest position in E I Du Pont De Nemours And Co (NYSE:DD) in the first quarter, holding a $93.6 million position in the company at the end of the quarter, buying 1.31 million shares. Orlando Muyshondt’s Tyrian Investments also made a $17.3 million investment in the stock, buying 242,200 shares during the quarter. The following funds were also among the new DuPont investors: Matthew Tewksbury’s Stevens Capital Management, Douglas Hirsch’s Seneca Capital, and Andre F. Perold’s HighVista Strategies.
Because of the negative sentiment from the world’s foremost money managers, and continuing uncertainty over further potentially costly challenges from activists like Peltz, we do not recommend a long position on E I Du Pont De Nemours And Co (NYSE:DD) at this time.
Disclosure: None
