Should You Follow Billionaire Nelson Peltz Into Bank of New York Mellon Corp (BK)?

The latest purchase by Trian is their first move on Bank of New York Mellon Corp (NYSE:BK)’s stock since the third quarter of last year, when they raised their already formidable exposure in the company by another 52%. That made them the largest shareholder among funds we track on Insider Monkey, surpassing First Eagle Investment Management, which held 27.72 million shares as of September 30, Warren Buffett’s Berkshire Hathaway, which held 23.38 million shares, and Richard McGuire’s Marcato Capital Management, which held 17.77 million shares.

The move shows that Trian is still bullish on the stock, especially at the levels it has sunk to over the past month; Bank of New York Mellon Corp (NYSE:BK) is down over 12% since December 23 after cresting to a 3-year high. The move also comes a day after Bank of New York Mellon Corp (NYSE:BK) revealed that regulators were recommending to the SEC that they be charged with securities violations over alleged acts of foreign bribery which involved internships being granted to relatives of sovereign wealth fund officials. BNY Mellon has stated that they don’t expect the results of the investigation to materially affect their business one way or the other.

More importantly, they come after Bank of New York Mellon Corp (NYSE:BK) revealed seemingly lackluster results for the fourth quarter of 2014. While adjusted net income grew to $667 million for the quarter from $629 million in the fourth quarter of 2013, adjusted net revenue was down to $3.67 billion from $3.77 billion a year ago, and well off expected revenue of $3.80 billion.

Despite that, there is plenty to like about their future prospects. Once the Federal Reserve begins to slowly raise the record-low interest rates, BNY Mellon’s growing interest-earning assets will become much more valuable. BNY Mellon has also been successful at cutting costs thanks to pressure from investors like Trian. Their adjusted non-interest expenses for the fourth quarter were trimmed to $2.65 billion, their lowest levels since the third quarter of 2012, and that trend is expected to continue.

With Trian Fund Management still showing a bullish sentiment towards Bank of New York Mellon Corp (NYSE:BK), that should be a good indication that they feel confident in the steps the bank is taking, which investors should take note of, which is why we actively monitor such hedge fund activity.

Disclosure: None