Billionaire Nelson Peltz runs the activist hedge fund Train Partners, a $5 billion hedge fund that is heavily concentrated in a select number of stocks. His latest “big win” came when fellow billionaire Warren Buffett announced that he was taking over H.J. Heinz, a stock that Train had a 5.4% stake in. Peltz’s Train Partners made a few keys moves last quarter and also maintains big bets on discount retail and industrials (check out Peltz’s top picks).
The only stock that Train sold shares of last quarter was State Street Corporation (NYSE:STT), a 66% reduction in shares owned. The stock is already up 25% year to date and might be getting ahead of itself. The low interest rate environment should continue to show weakness in State Street Corporation (NYSE:STT)’s net interest margin, and its top line revenue is being pressured due to declining trading revenue. As well, the bottom line is not expected to be stellar either, with the company’s profitability expected to be impacted by various financial regulations (read about State Street’s stress test).
Train also sold off its entire stake in Mondelez International Inc (NASDAQ:MDLZ). This comes after the company split from Kraft Foods in 2012. Mondelez International Inc (NASDAQ:MDLZ) is now the international snack food company, while Kraft’s North American grocery business trades as Kraft Foods Group.
It’s possible that Train sold Mondelez International Inc (NASDAQ:MDLZ) after the split, given the company was no longer as fully diversified as its previous Kraft Foods parent, but I believe the food company is worth taking a look at. The company pays a 1.8% dividend yield and is expected to grow EPS at an annualized rate of 12.6% over the next five years, putting it as an income and growth stock (see read more about why).
Train’s only addition was MeadWestvaco Corp. (NYSE:MWV), now making up the eighth spot in its portfolio. MeadWestvaco is now focused heavily on packaging after the sale of its envelope business and the spin-off of the consumer and office products. I think the packaging company’s revenue mix is intriguing, in that it is diverse across various consumer products, with 58% from food & beverage, 13% from home & beauty, 8% related to industrials and 18% for specialty chemicals.
Earnings growth for 2013 is expected to come from expansion to emerging markets, namely Brazil. Management has reaffirmed its targets of $1 billion in sales growth and 7 10% annual earnings growth over the next 3 to 5 years.