Billionaire Nelson Peltz’s Stock Picks

TRIAN PARTNERSNelson Peltz, manager of Trian Partners, is an activist investor who owns shares of a relatively small number of companies that he believes he can readily influence. Peltz was, for instance, appointed to the board of directors at Ingersoll-Rand Plc (NYSE:IR) and has expressed interest in the past to buy $250 million debt of the NHL’s New Jersey Blue Devils. Trian Partners recently released its 13F filing, disclosing a number of its holdings and some new positions.

Ingersoll-Rand PLC is now the fund’s second largest holding, with a position valued at about $568 million. The fund has a 7 percent stake in the company, and the board has reported that it will be considering the large set of recommendations put forth by Peltz. Perhaps the largest move, according to analyst speculation, is the possible split of the company’s air condition wing from its security system business. The company’s shares are up 50 percent year-to-date. The Street expects earnings per share of about $3.20 in 2012, up from $1.18 in 2011 and the highest in the past six years.

As we reported in July, Trian sold about 600,000 shares of Family Dollar Stores, Inc. (NYSE:FDO), which is still the fund’s most valuable holding. Since last June, when Bill Ackman recommended the stock at the Ira Sohn Conference, Family Dollar shares are up about 20 percent, though they are slumping from their mid-June highs. Ackman noted that Family Dollar was a $6.5 billion market cap business initiating a $750 million share buyback at the time and that the company boasts an excellent return on capital of 20 percent. That said, Wal-Mart Stores, Inc. (NYSE:WMT) is going to be heading into Family Dollar’s business segment with smaller boutique stores, which could threaten sales.

Peltz is chairman of the board at The Wendy’s Company (NASDAQ:WEN), and Trian Partners owns 83 million shares of the company, flat since the end of the first quarter. Operating margins for the famous hamburger chain were down to 5.6 percent in 2011 from 6.3 percent in 2010, which is further being eroded by increasing food prices. The company’s recent divestiture of Arby’s will allow it to focus on its own operations and, in particular, on improving same-store sales.

Trian has reduced its still sizable position in Kraft Foods Inc (NASDAQ:KFT) to 10.4 million shares from 12.4 million shares. This mirrors moves made by Warren Buffett’s Berkshire Hathaway to cut some of its holdings in this food and snacks company. Bill Ackman’s Pershing Square sold its entire stake in Kraft Foods Inc to enable the financing of its 1 percent ownership in The Procter & Gamble Company (NYSE:PG). Kraft is set to spin-off its curiously named Mondelez, which will take with it snack foods like Oreo, Cadbury, and Ritz. We recently noted that, as with Ingersoll-Rand, Peltz might be holding Kraft as a special situations play—spin-offs can be very lucrative as the Street values each of the components separately.

The fund also initiated a position in Lazard Ltd (NYSE:LAZ) valued at $145 million. Lazard Ltd is a holding company specializing in financial advising and asset management. This gives Peltz’s fund about a 4 percent stake in the company.

Absent from this quarter’s 13F is a stake in Domino’s Pizza, Inc. (NYSE:DPZ). The company is still repositioning its brand and has had impressive price performance. The fund also cut its holdings in Tiffany & Co. (NYSE:TIF) from 2.7 million shares to 1.38 million shares. Tiffany & Co. is having trouble facing up to global competition, though its long-term profitability is still attractive.

Like Bill Ackman and Dan Loeb, Peltz’s activist strategy looks for turnaround and influence in companies that have good brands or businesses but sub-par performance or execution. For Ingersoll-Rand and Wendy’s, Peltz’s advice and influence is going to have a large impact on investors’ returns.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!