Nelson Peltz is on a roll this year — and he has
|| Trian Partners founder Nelson Peltz. Photo:
The co-founder of New York–based activist hedge
fund firm Trian Partners is one of a handful of managers who
employ activist techniques that are enjoying big gains this
year. But Peltz is the leader of the pack so far. His eponymous
offshore fund, Trian Partners, surged another 4.7 percent in
September, bringing its gain for the first three quarters of
the year to 30 percent, while the domestic partnership was up
4.6 percent last month and is up 29 percent for the year. This
makes Trian Partners among the best-performing hedge funds this
year through the end of the third quarter.
Jeffrey Ubben’s ValueAct Capital Master Fund,
managed by his San Francisco–based hedge fund firm,
ValueAct Capital, added 5.8 percent in the third quarter and is
now up 19.8 percent through the first three quarters of the
year. And last week we reported that Daniel Loeb’s
Third Point Offshore Fund, managed by New York–based
Third Point, is up 18 percent for the year through September.
This compares with a 17.9 percent gain for the S&P 500 in
the first three quarters, excluding dividends reinvested.
Other activists are also faring pretty well, even though
they lag the overall market. Barry Rosenstein’s
New York–based Jana Partners gained 14.2 percent this
year through September 30, while David Einhorn’s
New York–based Greenlight Capital, which is a more
selective activist investor, was up 12.2 percent. Paul
Singer’s two main hedge funds, Elliott Associates
and Elliott International, are up 9.3 percent and 9.0 percent,
respectively, for the first three quarters of the year. Only
William Ackman’s New York–based Pershing
Square Capital Management is struggling this year, posting a
0.5 percent gain through nine months, thanks to big losses
betting on the shares of J.C. Penney Co. and against the stock
Trian, founded by Peltz, Peter May and Edward Garden, now
manages $7.36 billion in assets, according to its most recent
monthly snapshot, dated October 4. Both its onshore and
offshore hedge funds had eight core longs and one core short as
of October 1, and both funds had a net exposure of roughly 100
percent. However, the offshore fund was 123.7 percent long and
24 percent short, while the onshore fund was 103.2 percent long
and just 3.1 percent short.
The firm’s gains have been driven in part by
industrial conglomerate Ingersoll-Rand, which is up 35 percent
this year. Two companies that the activist is urging to merge
with each other — food company Mondelez International
and beverage giant PepsiCo — are up 20 percent and 16
percent, respectively, through the first nine months. Two new
holdings disclosed on Trian’s second-quarter 13F
filing, chemical company DuPont and auction house
Sotheby’s, are also doing well.
Trian owns more than two million shares, or 3 percent, of
Sotheby’s. The company has become a target of two
other activist investors — Loeb’s Third
Point and San Francisco–based Marcato Capital
Management, headed by Richard T. McGuire III — but so
far Trian has not shown any interest in getting into the fray
with management. Third Point recently raised its stake in
Sotheby’s to 9.3 percent and ratcheted up its
rhetoric over its activist intentions.
Shares of Sotheby’s are up between 20 percent
and 50 percent, depending on when Trian started scooping up the
shares. DuPont is up between 11 percent and 20 percent since
Trian started building its position in the second quarter.
ValueAct, which held 14 stocks at the end of the second
quarter, has especially been driven by four of them: Microsoft,
its largest holding, which is up more than 17 percent since the
firm disclosed its initial stake at the end of the first
quarter; No. 4 holding Adobe Systems, which is up 37 percent
this year; No. 3 holding (as of the end of the third quarter)
Valeant Pharmaceuticals International, up 85 percent; and KAR
Auction Services, a relatively small position, which has gained
40 percent this year.
We recently reported that the San Francisco–based
hedge fund firm lifted its ownership in Rockwell Collins, a
supplier to airplane manufacturers, to 9.7 percent of the total
shares. As a result, it is ValueAct’s
Third Point, meanwhile, made $665 million in late July when
it sold its huge activist stake in Yahoo. The Internet
company’s stock — if not its
profitability — has been turned around in the past
year under new CEO Marissa Mayer.
Jana is also very busy these days. Entering the third
quarter, Jana’s two largest positions in
individual stocks were activist stakes in fertilizer company
Agrium and oilfield services company Oil States International.
In mid-August, Jana boosted its stake in the latter to 6.45
million shares. Oil States is up about 35 percent since Jana
disclosed its stake in the spring.
Its activist stake in chemical company Ashland, its
third-largest individual stock position, is up more than 16
percent since Jana reported its initial stake at the end of
March. Agrium was down 16 percent through the first nine months
of the year.
More recently, last week Jana disclosed a new activist
position: a 13.5 percent stake in Outerwall, best known for its
Redbox movie rental vending machines. And last month Jana
disclosed that it owns 14.95 million shares of supermarket
chain Safeway, including options to purchase 3.53 million
shares of stock, for a total stake of 6.2 percent.