Trian Partners and Raging Capital Management Reveal Their Latest Moves

Nelson Peltz Trian Partners trimmed its stake in Family Dollar Stores, Inc. (NYSE:FDO) by more than 6 million shares. According to the 13D Form filed with the U.S. Securities and Exchange Commission on Tuesday, the investment firm now owns around 2.3 million Common Shares, which represent just a little over 2% of the company’s outstanding stock. Another important transaction took place at the beginning of the week, which saw William C. Martin’s Raging Capital Management disclose an amendment to its position in A. M. Castle & Co (NYSE:CAS). At the beginning of January, the investment firm initiated a new position in the company with the purchase of 3.4 million shares. However, according to the amended 13D filing, Mr. Martin’s firm now holds around 3.7 million Common Shares, representing 16% of the company’s outstanding stock. TRIAN PARTNERS

Trian Partners was founded by Nelson Peltz, Peter May, and Ed Garden in 2005 and is currently headquartered New York. The alternative investment management firm focuses primarily on investing in undervalued equities, often taking on an activist stake in underperforming companies. Whenever possible, the hedge fund seeks to engage with the board of directors, working together with management and making proposals intended to increase shareholder value. The firm managed by Mr. Peltz currently boasts an equity portfolio valued at around $9.4 billion, with a clear focus on companies belonging to the consumer goods, services, and financial industries. In its latest 13F filing, Trian Partners disclosed its top picks for the fourth quarter, revealing E I Du Pont De Nemours And Co (NYSE:DD), PepsiCo, Inc. (NYSE:PEP), and Mondelez International Inc (NASDAQ:MDLZ) as its largest holdings.

After reducing its exposure to Family Dollar Stores, Inc. (NYSE:FDO) by approximately 71% this week, the company no longer counts with Trian Partners as its largest institutional investor. This comes as no surprise, considering the announced merger with Dollar Tree, Inc. (NASDAQ: DLTR), which was approved by Family Dollar Stores, Inc. (NYSE:FDO) stockholders last week. As the company turns into a merger arbitrage play, hedge funds seeking to profit from the merger are keen on buying a great deal of shares, including the stake held by Trian Partners. Hence, Mr. Peltz’ firm is probably looking to cash in and invest its money elsewhere in order to earn higher returns.

Despite the large reduction in Trian Partners’ stake, Family Dollar Stores, Inc. (NYSE:FDO) still counts with the backing of several institutional investors. Although John Paulson’s Paulson & Co reduced its holdings in the company by 33% in the third quarter, it continues to boast a position amounting to 5.4 million shares. Daniel S. Och’s Oz Management also continues to hold Family Dollar Stores stock in its equity portfolio, after disclosing a new stake of 3.6 million shares in its latest 13F filing.

Raging Capital Management was founded in 2006 by William C. Martin, who currently occupies the positions of Chief Investment Officer and Chairman. In addition to his involvement in the Princeton, New Jersey based investment firm, Mr. Martin co-founded numerous financial information companies, such as Ragingbull.com and InsiderScore.com.

William Martin Raging Capital Management

Raging Capital Management boasts an equity portfolio valued at around $893 million, with more than 63% of its holdings stemming from the information technology and energy sectors. Equities from the industrial goods industry – where A. M. Castle & Co (NYSE:CAS) operates – accounted for 10% of the firm’s holdings as of its last 13F filing. Furthermore, the acquisition of 3.7 million shares has turned Raging Capital Management into one of the company’s largest institutional investors. A. M. Castle & Co is involved in the distribution of specialty metals and plastics and has a market cap of $154 million.

In addition to Mr. Martin’s investment firm, a number of financial institutions hold a position in A. M. Castle & Co (NYSE:CAS). Chuck Royce’s Royce & Associates for example owns around 1.7 million shares, after increasing its stake in the company by 19% during the third quarter. Joe Huber’s Huber Capital Management also remains involved in A.M. Castle & Co, with holding stock amounting to 1.5 million shares. The company’s stock is currently trading at a discount, after share prices dropped around 50% over the past year. Hence, it seems Raging Capital Management chose an appropriate time to increase its stake in the undervalued company.

Disclosure: Pablo Erbar holds no position in any stocks or funds mentioned.