Sysco Rising After Nelson Peltz Reveals Activist Stake

Shares of SYSCO Corporation SYY are trading up 6.7 percent on Friday afternoon, after Nelson Peltz’s Trian Partners disclosed a new activist position in the company. According to a Schedule 13D filed with the SEC, the fund acquired, over the past couple of months, 42,061,438 shares of the company’s Common Stock, which represent 7.08 percent of the total shares outstanding.

This stake makes of Trian the largest institutional investor of record in the food and related products distributor. Second in line is Donald Yacktman’s Yacktman Asset Management, which, after boosting its participation by 8 percent over the second quarter, disclosed ownership of 33,960,032 shares of the company, barely surpassing the Vanguard Group, which last acknowledged holding 33,037,197 shares.

Another major hedge fund supporter is Ric Dillon’s Diamond Hill Capital Management, which also increased his bet on SYSCO over the second quarter, by 4 percent, to 6,309,902 shares, or more than 1 percent of the company.

Peltz The Activist

Back to Trian’s stake, one thing should be highlighted: this is an activist position. According to the SEC filing, the fund acquired the stock under the belief that it was undervalued. The firm declares having met and started discussions with the company’s President and Chief Executive Officer, William J. Delaney, and Jackie M. Ward, Non-Executive Chairman of the Board of Directors, regarding the company’s problems and strategies that the fund believes, if implemented, could enhance shareholder value.

Among the proposals, the firm included recommendations relating to the company’s “operations, capital structure, capital allocation, corporate governance and Board structure and composition” (including Board representation for Trian).