Famed activist investor Nelson Peltz founded Trian Partners in 2005 and has built it into a financial powerhouse that oversees more than $12 billion in assets under management. The fund’s equity portfolio was comprised of ten stocks spread among a number of sectors as of December 31, but with large exposure to consumer staples stocks, which accounted for approximately 47% of the portfolio’s value. Insider Monkey calculates a fund’s stock picking skill by looking at the weighted average returns of its long positions in companies with a market cap that exceeds $1 billion, based on the size of those positions at the beginning of each quarter. According to our data, all ten of the stocks held by Trian qualified and these stocks generated a modest 0.2% return during the first quarter. In this article we’ll take a look at five of those stocks and find out how they fared individually during the quarter.
At Insider Monkey, we track around 785 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details about our small-cap strategy).
#5 Pentair plc. Ordinary Share (NYSE:PNR)
Shares Owned by Trian Partners (as of December 31): 13.7 million
Value of Holding (as of December 31): $677 million
Having slid by as much as 14.5% by mid-February, Pentair plc. Ordinary Share (NYSE:PNR) recovered quickly and finished the first quarter up by 10.3%. At the end of February, the British industrial manufacturing company announced a quarterly dividend payment of $0.33 per share for the first and second quarters of 2016 and a $0.34 per share payment for the remaining two quarters of the year. This is the 40th consecutive year that Pentair has increased its dividend payments. Pentair released its first quarter results on April 26, beating consensus estimated with adjusted earnings per share of $0.76, though the results were flat year-over-year. Revenue on the other hand was by 7% to $1.60 billion and also topped estimates. Pentair plc. Ordinary Share (NYSE:PNR) was not overly popular among the hedge funds followed by Insider Monkey, with only 19 of them having reported a stake in the company as of the end of 2015, down from 23 a quarter earlier. Larry Robbins‘ Glenview Capital indicated a holding of 3.57 million shares of Pentair as of December 31, down by 36% over the fourth quarter.
#4 Bank of New York Mellon Corp (NYSE:BK)
Shares Owned by Trian Partners (as of December 31): 30.9 million
Value of Holding (as of December 31): $1.28 billion
Bank of New York Mellon Corp (NYSE:BK) ended the first quarter down by 10%, although at one point it was down by 20% amid the wider market sell off which hit the banking sector particularly hard. The main factor behind the trend reversal was the company’s fourth quarter earnings report that surpassed analysts’ expectations. The company posted revenue of $3.72 billion, pretty much in-line with analysts’ projections of $3.75 billion, while earnings stood at $0.68 per share, topping estimates of $0.64. At the end of 2015, roughly 13% of Bank of New York Mellon’s common stock was held by 49 top hedge funds in our system. Warren Buffett is also keeping tabs on Bank of New York Mellon Corp (NYSE:BK), as Berkshire Hathaway reported ownership of 20.1 million shares of the company worth $829 million at the end of the fourth quarter.
Turn the page to find out about three other stocks that delivered mixed returns for Mr. Peltz in the first quarter.