Big Adjustments to Billionaire Nelson Peltz’s Consumer Staples Holdings During Q4

Trian Fund Management, which was founded in 2005 by billionaire Nelson Peltz, is today a multi-billion dollar investment management firm and of the 140 Biggest and Most Famous Activist Hedge Funds in the world. Trian invests in high quality but undervalued companies and works collaboratively with their management teams to execute operational and strategic initiatives designed to drive long-term sustainable earnings growth.

Trian Fund Management, which is known for making large investments in a limited number of companies, focuses mainly on consumer companies, industrial firms, and financial companies. That philosophy is evident from the fund’s latest 13F filing, which shows long positions in just eight stocks, while its 13F portfolio was valued at $11 billion at the end of 2016. During the fourth quarter, Trian increased its stake in three of its positions and likewise trimmed the size of three other positions. In this article, we’ll analyze some of Trian’s top holdings and see how it traded them during the final quarter of 2016.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 39.7% gains over the past 12 months and outperformed the 24.1% gain enjoyed by the S&P 500 ETFs. Our enhanced small-cap hedge fund strategy returned more than 45% over the last 12 months and outperformed SPY by more than 30 percentage points over the last 4.5 years (see the details)

Trian Fund Management increased its stake in SYSCO Corporation (NYSE:SYY) by 6,658 shares during the fourth quarter, hiking its position to 43.97 million shares worth $2.4 billion at the end of December. The position ranks as the fund’s largest and gives Trian an 8% ownership stake in the company. SYSCO Corporation’s (NYSE:SYY) stock has cheered investors by returning more than 80% over the last five years, outperforming the Dow Jones. The company also increased its dividend by 6% in November. The food distribution company has benefited greatly from the acquisition of UK-based Brakes Group last summer, which helped it increase its international footprint. Subsequently, SYSCO’s international sales more than doubled during its fiscal 2017 second quarter, to $2.63 billion. The number of funds in our system with SYSCO Corporation (NYSE:SYY) in their portfolios inched up by two to 35 during the October-December period. Donald Yacktman‘s Yacktman Asset Management reduced its holding of SYSCO by 21% to 11.27 million shares during the period.

Nelson Peltz’s firm sold 5.21 million shares of General Electric Company (NYSE:GE) in the fourth quarter, ending the quarter with a 67.42 million-share stake worth $2.1 billion. On the contrary,  Steve Cohen‘s Point72 Asset Management initiated a new position in General Electric (NYSE:GE), buying 1.41 million shares during the fourth quarter. General Electric Company (NYSE:GE) announced its intention to merge its oil and gas business with Baker Hughes Incorporated (NYSE:BHI) last October. The merged entity would be the second-largest player in the oilfield services industry in terms of revenue. During the December quarter, the company reported adjusted earnings of $0.46 on revenue of $33.1 billion, the latter figure missing the consensus mark of $33.6 billion due to slowing growth for oil and gas businesses. In 2017, the company expects earnings to be within the range of $1.60 to $1.70 per share, with 3% to 5% organic growth. GE shares worth $5.16 billion were held by 54 hedge funds that we track as of the end of December, compared to $5.08 billion in shares held by 55 funds a quarter earlier.

On the next page, we’ll check out three of Trian’s other positions and how the fund positioned itself in them heading into 2017.

Trian Fund Management sold 3.79 million shares of Mondelez International Inc. (NASDAQ:MDLZ) in the December quarter, reducing its position to 44.23 million shares valued at $1.96 billion at the end of December. On the other hand, Ken Griffin’s Citadel Advisors grew bullish on the snack giant during that time, buying 1.86 million shares to increase its position to 1.93 million according to its latest 13F filing. Shares of Mondelez International Inc. (NASDAQ:MDLZ) have been trading in a narrow range over the last year and are currently trading near the bottom of their yearly range at $42.50. The stock performance has remained tepid in 2017, falling by 4%. The uncertainty caused by the election of Donald Trump has contributed towards the poor performance. The company said that political turmoil including a backlash against globalization has caused disruption and uncertainty for its global business. As per our database, the number of funds long Mondelez International Inc. (NASDAQ:MDLZ) increased by ten to 63 in the fourth quarter, while the value of their holdings declined by almost 3% to $5.74 billion.

In E I Du Pont De Nemours And Co (NYSE:DD), Trian reduced its holding to 14.83 million shares valued at $1.09 billion, by selling 2.62 million shares. Other funds sharing the same sentiment as Trian Management included Glenview Capital Management, OZ Management and Arrowstreet Capital. E I Du Pont De Nemours And Co (NYSE:DD) and Dow Chemical Co (NYSE:DOW) are on track to win EU approval for a proposed merger and create a company with a market value in excess of $135 billion. E I Du Pont De Nemours And Co (NYSE:DD) reported fourth quarter revenue of $5.21 billion, a decline of 2% quarter-over-quarter, as growth in its performance materials, electronics & communications, and industrial biosciences segments was offset by a decline in its agriculture segment. For the first quarter of 2017, the company is expecting operating earnings to increase by 8% year-over-year, driven by cost savings and a change in seed delivery timing.

Procter & Gamble Corporation (NYSE:PG) was a new addition to Trian’s portfolio as the fund bought 6.42 million shares worth $539 million as of December 31. Israel Englander’s Millennium Management, on the other hand, sold off its entire stake of 72.58 million shares in the stock during the same period. Procter & Gamble Corporation (NYSE:PG) has a big competitive moat, as it owns some of the best-known global consumer brands such as Olay, Old Spice, Pantene, and Charmin. Shares of PG have climbed by 8% in 2017, as the company reported better-than-expected quarterly results for its second quarter of fiscal 2017. Adjusted earnings of $1.08 per share beat analysts’ expectations of $1.06, though revenue of $16.86 billion narrowly missed the consensus of $16.94 billion. Procter & Gamble Corporation (NYSE:PG) recently announced that it was starting a $10 billion cost-cutting program. That follows the company rolling out a $1.2 billion annual cost cutting plan in 2012, which led to total savings of $7.2 billion over the next five years. Overall hedge fund sentiment in the stock was negative during the final quarter of last year, as 56 funds owned its shares, down from 71 funds at the end of September.

Disclosure: None