Will Activist Nelson Peltz’s Latest Win Against DuPont Change Hedge Fund Sentiment Towards the Stock?

Nelson Peltz’s primary argument against Kullman and her management of DuPont was that the company continually missed financial performance targets. Trian also argued that DuPont still had a lot of costs that can be cut. By breaking up into smaller firms, the companies would have more management focus on the areas they specialize in, argued the activist investor. It looks as though DuPont is still missing its performance targets, as it also revealed in the announcement of its CEO’s retirement that it now expects operating earnings for the full year to be about $2.75 per share, below the prior guidance of $3.10 a share. Second half operating earnings per share is now expected to be about $0.40, down from the previous guidance of $0.75. The lowered guidance is because of foreign exchange headwinds and weaker agricultural markets, particularly in Brazil, the firm said.

Hedge funds were not bullish on E I Du Pont De Nemours And Co (NYSE:DD) in the second quarter, as they ended the period owning just 4.10% of all the company’s shares. This brings their total investment in the firm at approximately $2.4 billion. The sentiment may be turning, however, as hedge funds increased their stake in the 213-year-old company by almost 10% during the quarter, despite a 10.52% decline of the stock. A total of 46 hedge funds were long DuPont at the end of June, up by 10 compared to March 31. Trian Partners held the largest stake among the investors we track at the end of the second quarter with a holding comprised of 24.56 million shares. Adage Capital Management, led by Phill Gross and Robert Atchinson, owned 1.4 million shares, up by 2% on the quarter. D.E. Shaw & Co., L.P., founded by David E. Shaw, upped its stake by 472% to end June with 1.03 million shares.

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