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DuPont (DD), PepsiCo (PEP), Mondelez (MDLZ): Activist Billionaire Nelson Peltz Beats the Market in Q1

Nelson Peltz’s Trian Partners is embroiled in a vicious proxy fight with E. I. du Pont de Nemours and Company (NYSE:DD), which occupies the top spot in its equity portfolio. However, that hasn’t stopped the activist fund manager from delivering solid returns to his investors. Peltz’s 11 long positions beat the market during the first quarter, with their weighted average returns weighing in at 2.3%. The S&P 500 returned just 0.9% in the first quarter of the year.


Following activist funds like Trian Partners is important because it is a very specific and focused strategy in which the investor doesn’t have to wait for catalysts to realize gains in the holding. A fund like Trian can simply create its own catalysts by pushing for them through negotiations with the company’s management and directors. In recent years, the average returns of activists’ hedge funds has been much higher than the returns of an average hedge fund. Furthermore, we believe do-it-yourself investors have an advantage over activist hedge fund investors by simply piggybacking activist’s moves, as they don’t have to pay 2% of their assets and 20% of their gains every year to compensate activist hedge fund managers. Soon, we’ll be releasing a new quarterly newsletter written by former activist hedge fund analyst Michael Bland that tracks 10 or so activist campaigns at any given time.

Peltz’s top position is arguably his most contentious activist campaign ever, as he attempts to break up the 212-year-old chemicals giant E. I. du Pont de Nemours and Company (NYSE:DD). Peltz held a 24.31 million share position in DuPont, which was valued at $1.80 billion at the end of 2014. The position was increased by 250% during the fourth quarter, and has since been upped slightly to approximately 24.60 million shares according to Peltz’s latest filings. E. I. du Pont de Nemours and Company (NYSE:DD) shares were down by 2.74% during the quarter, which was beset by the warring actions of the two sides, though shares had achieved a 16-year high in the middle of March before a big drop to close the quarter.

Trian first nominated four director candidates in early January, stating at the time that the company’s management had not been held accountable for repeated missed earnings targets, while also urging for a split of the company. DuPont countered by adding two new directors to its board, neither of which were the ones put forward by Trian. In February, Trian released a 78-page report that went into detail about the under-performance of the company,  while also filing a preliminary proxy statement to have its four director candidates, including Peltz himself, added to DuPont’s board. In early April, E. I. du Pont de Nemours and Company (NYSE:DD) countered with a presentation of its own, blasting Trian’s proposals and claiming a split of the company would cost it billions of dollars. DuPont also urged shareholders to vote against the candidates put forth by Trian, declaring them inexperienced and incapable of adding value to the company.

Some of the shareholders of E. I. du Pont de Nemours and Company (NYSE:DD) which may play a role in the upcoming proxy vote include Phill Gross and Robert Atchinson’s Adage Capital Management, and John A. Levin’s Levin Capital Strategies.

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