Long-Term Returns of Nelson Peltz’s Activist Targets
In this article, we discuss long-term returns of Nelson Peltz's activist targets. If you want to see more stocks in this selection, check out Long Term Returns of Nelson Peltz's 5 Activist Targets.
Nelson Peltz is a popular name when it comes to activism on Wall Street. The billionaire investor has made a name for himself by serving several boards and pushing for drastic changes to unlock shareholder value. He helped cofound Trian Partners, a hedge fund focused on investing in high-quality but highly undervalued and underperforming public companies.
Although Peltz is consistently open to cooperative efforts with management teams and boards to unlock value, he is not hesitant to initiate proxy battles when necessary. An average return of 38.12% since 2013 underscores why he is a revered activist investor on Wall Street.
At the height of the bear run in 2022, Trian Partners was down by 10.6%, outperforming the S&P 500, which ended the year down 19%. Trian's performance was much better, considering on average hedge funds lost 17.2% in 2022.
As an activist investor, Peltz often lobbies for changes within companies he is engaged in proxy battles. For starters, he may push for higher dividends, share buybacks, cost cuts, and management changes. He may sometimes push for company dissolution or the sale of some units. After acquiring a $1.3 billion stake in PepsiCo Company in 2013, he called the CEO and demanded the company acquire Mondelez International, a company in which he owned $1 billion in stakes.
After acquiring a 9.9% stake in asset manager Invesco and Janus Henderson in 2020, the activist investor pushed for a merger for the two companies. While the deal never materialized, he succeeded in turning Invesco's fortune around, with its operating margins and earnings more than doubling. While Janus did underperform, Peltz continued to ramp up stakes, becoming its largest shareholder after that.
In the most recent past, Peltz has waged a proxy battle with Disney after formally launching a bid for a board seat. The activist investor insists he wants to rescue the company from what he calls a crisis of overspending on the streaming business, the purchase of 21st Century Fox, and failed succession planning. Peltz's latest onslaught is seen as a serious challenge to Bob Iger, one of the most famous executives who returned from retirement to lead the company for a second time.
Nelson Peltz of Trian Partners
Our methodology
Peltz's activist campaigns have generated an average of 9.6% over the past 15 years. While some campaigns have been extremely successful, generating returns of more than 30%, some have been a disappointment, losing as much as 15%, as was the case with General Electric.
We have compiled a list of some of the top activist campaigns engineered by the billionaire investor since founding Trian Partners in 2005. The campaigns are ranked chronologically based on when they occurred.
Long-Term Returns of Nelson Peltz's Activist Targets
12. Unilever PLC (NYSE:UL)
Activist Investment: 2022
Long Term Returns Since Peltz's Investment: 11.87%
S&P 500 Gain: 8.63%
Unilever PLC (NYSE:UL) is a consumer goods company that operates through beauty and well-being, Personal Care Nutrition, and Ice Cream Segments. The company also deals in hair care products such as shampoo, conditioner, and styling.
Peltz started building a position in the British Consumer goods company in 2022. The activist investor has since pushed for management changes, having approached former CEOs of consumer goods companies to take up the top job at the Dove soap maker. He has also committed to helping drive Unilever's strategy operations sustainability and shareholder value.
11. The Walt Disney Company (NYSE:DIS)
Activist Investment: 2022
Long Term Returns Since Peltz's Investment: -16.98%
S&P 500 Gain Since Peltz's Investment: 17.33%
A conglomerate in the entertainment industry, The Walt Disney Company (NYSE:DIS) is best known for its leading role in creating and providing entertainment and information. The company also operates some of the biggest theme parks. The company saw a slew of activist investor activity in 2022, led by Peltz and Daniel Loeb.
Peltz increased his stake in The Walt Disney Company (NYSE:DIS) in early 2023 in an attempt to gain sizable influence on the company's future roadmap. With his hedge fund Trian Partners, the activist investor was forced to end a proxy battle in February after Disney agreed to restructure its business and launch an effort to reduce costs by about $5.5 billion.
With the changes, Peltz ended his quest for a board seat after CEO Iger laid out plans for cutting 7,000 jobs as part of the cost-cutting measures. The CEO has also agreed to consider the sale of the company's linear networks like ABC Freeform and National Geographic.
10. Invesco Ltd. (NYSE:IVZ)
Activist Investment: 2020
Long Term Returns Since Peltz's Investment: 142%
S&P 500 Gain Since Peltz's Investment: 45.38%
Invesco Ltd. (NYSE:IVZ) is an independent asset investment management company that provides a range of investment capabilities and outcomes to help clients achieve various objectives. Activist investor Peltz first took an interest in Invesco in 2020 and started engaging the company regarding various strategic and operational initiatives.
The activist investor pushed for two board seats and discussed board refreshments. Through Trian Partners, the hedge fund manager also encouraged Invesco Ltd. (NYSE:IVZ) to explore strategic combinations with one or more companies in asset management. Peltz wanted the company to merge with Janus, where he held some stakes.
A proposed merger with Janus did not happen, and Peltz ended up stepping down from the board following his appointment to the Board of Janus Henderson Group. Trian Partners trimmed its stake in Invesco to 33.9 million in May 2023 from 55.6 million shares.
9. The Procter & Gamble Company (NYSE:PG)
Activist Investment: 2017
Long Term Returns Since Peltz's Investment: 68.60%
S&P 500 Gain Since Peltz's Investment: 87.5%
The Procter & Gamble Company (NYSE:PG) is a multinational consumer goods company with a wide portfolio of product portfolio including conditioners, shampoo male and female blades, and razors. The activist investor first aimed at the company in 2017 and took a more surgical approach in lobbying for a single board seat.
Peltz would later allege that The Procter & Gamble Company (NYSE:PG) had wasted about $100 million to block his attempt to get on the board, terming it the dumbest thing.
The activist investor would win the board seat with the slightest margin after waging one of the biggest proxy fights in the history of the $220 billion consumer goods giant.
He joined the board, having struck a truce with the management agreeing to end the proxy fight. He would exit the board four years later, terming his tenure successful in creating tremendous value for all stakeholders.
8. Sysco Corporation (NYSE:SYY)
Activist Investment: 2015
Long Term Returns Since Peltz's Investment: 104%
S&P 500 Gain Since Peltz's Investment: 101%
With its subsidiaries, Sysco Corporation (NYSE:SYY) engages in marketing and distributing foods and other related products, small wares, kitchen equipment, and table-on items for restaurants. The company was the subject of an activist investor takeover in 2015 when Peltz confirmed a 7% stake in the giant food distributor.
In its filing, Trian Partners reiterated that the company boasts several competitive operating and financial performance advantages but continued to underperform relative to its potential. In the regulatory filing, the hedge fund reiterated that it could adopt a strategic and operating initiative to improve margins and enhance working capital efficiency.
Days after the announcement, Peltz got his wish and was added to the company's board. With his addition to the board, the activist investor pushed for an increase in dividends, the repurchase of shares, and the divestment of non-core business.
7. Mondelez International, Inc. (NASDAQ:MDLZ)
Activist Investment: 2013
Long Term Returns Since Peltz's Investment: 60.71%
S&P 500 Gain Since Peltz's Investment: 43%
Mondelez International, Inc. (NASDAQ:MDLZ) manufactures, markets, and sells snack food and beverage products. Activist investor Peltz disclosed stakes in Mondelez in 2013 as the stock had tumbled significantly following the company's split from Kraft Foods.
There were reports that the activist investor intended to push for a merger between Mondelez International, Inc. (NASDAQ:MDLZ) and PepsiCo. The reports came at a time when PepsiCo was in the process of exploring restructuring options for its underperforming North American beverage business. Speculation was rife that it could buy Mondelez.
Peltz discussed with Mondelez management the company's operations capital structure and corporate governance. In early 2014, Mondelez announced Peltz was to join the board after criticizing the company for doing little to cut costs. He joined the board as part of a compromise agreement that resulted in him ending his push to have PepsiCo acquire Mondelez International, Inc. (NASDAQ:MDLZ).
Peltz continued to rack up stakes in the company until 2015 but left the board in 2016, reiterating satisfaction with the progress made at the confectionery company.
6. PepsiCo, Inc. (NASDAQ:PEP)
Activist Investment: 2013
Long Term Returns Since Peltz's Investment: 44.4%
S&P 500 Gain Since Peltz's Investment: 46.94%
PepsiCo, Inc. (NASDAQ:PEP) manufactures, markets, distributes, and sells various beverages and convenient foods worldwide. The company was the subject of an activist investment from Peltz in 2013 when it was undergoing restructuring amid struggles with its North American operations. The company was reviewing a potential spinoff of its beverage business, which remained a significant drag despite massive investments.
In 2014, the activist investor renewed his struggle to force PepsiCo, Inc. (NASDAQ:PEP) to spin-off the beverage unit from its flourishing snacks division.
"Two leaner and more entrepreneurial companies" through the spinoff would boost sales and margins in the snacks business, while the drinks business would generate a stable flow of cash that could be returned to shareholders, Peltz said.
CEO Indra Nooyi shot down the spin-off efforts, insisting that a split up would hurt PepsiCo, Inc. (NASDAQ:PEP)'s ability to negotiate with retail customers. The feud only came to an end when PepsiCo agreed to allow a representative of Peltz's fund to join the board.
Trian Partners exited its position in the beverage giant in 2016, three years after launching a campaign to have PepsiCo, Inc. (NASDAQ:PEP) split into two.
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Disclosure: None. Long-Term Returns of Nelson Peltz's Activist Targets is originally published on Insider Monkey.