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How To Invest Like Nelson Peltz

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How To Invest Like Nelson Peltz

Activist investor Nelson Peltz is one of the most well-known investors of his generation. The moves by Peltz into companies are widely followed and typically send stocks trading higher.

About Nelson Peltz: The legendary investor started in his family business selling frozen food products after dropping out of university. Peltz eventually took control of the family business and then sold it for an $8-million profit.

Peltz acquired over $1 billion in junk bonds and helped turn Triangle Industries, a packaging company, into a Fortune 100 company. He would later sell the company.

Peltz owns 50%% of Trian Fund Management, an investment company that has assets of over $6 billion.

Related Link: Activist Investor Nelson Peltz Says He Is Putting New Capital To Work 

Invest In Value: Peltz favors the consumer staples sector and finance, but has also taken stakes in companies in basic materials and industrials.

One of the most famous investments by Peltz was acquiring the Snapple brand from Quaker Oats for $300 million in 1997. Three years later, Peltz was able to sell the brand for $1.45 billion by unlocking its hidden value. 

“We ask the leadership of the companies that we invest in to act like they own 100% of the company,” said Peltz, noting it leads to impressive returns.

Peltz has taken stakes in companies and then pushed for cost savings initiatives. This includes taking a stake in Wendy’s (NASDAQ: WEN) and pushing for the sale of Tim Horton’s, and a stake in Family Dollar that led to closing numerous stores to cut costs.

Peltz's Push For Mergers: One of the strategies taken by Peltz is to acquire stakes in two similar companies and then push the boards to hold talks of a potential merger.

Peltz took stakes and pushed for a merger between DuPont and Dow Chemical. Peltz lost a proxy battle for a seat on the board. The activist threatened to come back in another battle, which led to the CEO resigning.

Peltz pushed for PepsiCo (NYSE: PEP) to split up and merge with Mondelez International (NASDAQ: MDLZ). The move would see the creation of separate beverage and snack businesses, but so far Pepsi seems uninterested in making the move.

A current move by Peltz could be pushing for a merger in the investment management space. Peltz acquired a 9.9% stake in Invesco (NYSE: IVZ) and a stake in Janus Henderson Group (NYSE: JHG). CNBC reports Peltz could be pushing the companies to merge, and he has held talks to expand the board. 

Push For Board Seats: Peltz famously pushed for a board seat with The Procter & Gamble Company (NYSE: PG). This was the largest director election battle in the history of proxy fights.

After Peltz won the seat, the company began holding talks with him over possible changes that could be made to unlock value in shares.

Nelson Peltz illustration by Joel Stralnic.

 

Related Articles (IVZ + JHG)

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Posted-In: activist investor board of directors Nelson Peltz Proxy Battle Trian Fund ManagementEducation Hedge Funds General Best of Benzinga

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