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Billionaire Nelson Peltz’s Latest Portfolio: Top 7 Stock Picks

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·8 min read
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In this article, we take a look at billionaire Nelson Peltz's top 7 stock picks as of the end of the first quarter of 2022. You can skip our discussion on the latest developments surrounding Peltz's hedge fund and go to Billionaire Nelson Peltz's Latest Portfolio: Top 5 Stock Picks.

Nelson Peltz is a renowned American activist investor and co-founder of Trian Partners. In May, Peltz was announced as a board member by Unilever PLC (NYSE:UL) after the billionaire acquired 37.4 million shares in the company, reflecting a total stake of 1.5%. This made Peltz the fourth biggest shareholder in the company. The CEO of the New York-based Trian Partners built a stake in Unilever, listed on the London Stock Exchange (LSE), using complex financial instruments like options and derivatives since January 2022. This means that Peltz does not completely own the underlying stake, but this has not stopped him from booking a seat on the Board of the consumer goods giant.

Peltz will also serve on the compensation committee of Unilever PLC (NYSE:UL), where he will have a direct say over the compensation structure of the directors, including Unilever's CEO, Alan Jope. Peltz is expected to fix incentive schemes for management staff.

According to financial experts and market observers, Peltz has taken this stake to shake up the diversified operations of the British firm. The 79-year-old intends to pressurize Unilever PLC (NYSE:UL) into offloading some of its brands through a spin-off or break up of its operations. Peltz believes Unilever PLC (NYSE:UL) could work more efficiently if beauty, home care, and personal care businesses were split and made into smaller business units. On the flip side, the company would lose the synergies across the business segments. Unilever PLC (NYSE:UL) is one of the few consumer goods companies that has been unable to generate healthy returns as economic activity received a boost following the end of COVID-19 lockdowns globally. The stock has dipped further despite the global economy recovering to pre-pandemic levels and is down 30% from its all-time high in 2019. Peltz's stake has increased pressure on CEO Alan Jope to review the company policies.

However, Peltz is also now finding himself at the receiving end of investor pressure. Investors including Janus Henderson Investors UK Limited, Global Value Fund, and Pelham Capital are calling for reforms at Peltz's Trian Investors 1 fund. The committee aims to remove three board members and nominate two independent directors to be a part of the hedge fund's management. The committee's campaign for reforms follows a recent policy change made by the hedge fund. After going public in September 2018, Trian Investors had the aim of investing in one publicly listed firm and helping the company expand. Following the firm's growth, the hedge fund would close the investment and give returns to investors. However, Trian Fund 1's management recommended a number of adjustments to the fund's investment strategy last year. These modifications would enable Trian Investors to hold several investments at once, and the management could reinvest gains and capital after closing an investment rather than returning them to shareholders. The committee of investors believes this change would largely favor the hedge fund manager.

Hedge Fund Performance

In addition to the investor pressure, Trian Partners was also heavily impacted by the Covid-19 pandemic last year. In March 2020, Peltz saw his portfolio value decline by over 16% due to a broader market sell-off. As per a portfolio update presented by Bloomberg, these losses resulted in an almost 25% fall in the hedge fund's assets for the year ended March 2020. In the past five years, Trian Partners has posted inconsistent results. According to HSBC statistics, the portfolio value increased by 3.7% in 2017 and by 10.9% in 2016. However, it saw a sharp decline of around 6% in 2018. Some of the notable companies included in Peltz's Q1 2022 portfolio are Sysco Corporation (NYSE:SYY), The Wendy's Company (NASDAQ:WEN), and Janus Henderson Group plc (NYSE:JHG).

TRIAN PARTNERS
TRIAN PARTNERS

Nelson Peltz of Trian Partners

Our Methodology

In this article, we will take a look at the seven biggest holdings of Peltz's Trian Partners as of March 31, 2022. We have ranked these companies in ascending order according to their weightage in the billionaire's portfolio. Out of these seven stocks, Trian Partners increased its stake in five, reduced its stake in one, and kept one's weightage unchanged.

We have discussed the latest developments, growth prospects, and hedge fund sentiment for each stock. The hedge fund sentiment has been determined using Insider Monkey's database of over 900 elite funds tracked at the end of Q1 2022.

Billionaire Nelson Peltz's Latest Portfolio: Top 7 Stock Picks

7. Mondelez International, Inc. (NASDAQ:MDLZ)

Number of Hedge Fund Holders: 48

Nelson Peltz's Trian Partners' Holdings: $28,268,000

Percentage of Nelson Peltz's Trian Partners' Portfolio: 0.47%

Stock Price as of June 29: $62.05

Mondelez International, Inc. (NASDAQ:MDLZ) is a Chicago, Illinois-based beverage, confectionery, and snacks company.

On June 20, the company announced the acquisition of Emeryville, California-based Clif Bar & Company for $2.9 billion. The addition of organic energy bars like Luna, Clif, and Clif Kid will help the snack business of Mondelez International, Inc. (NASDAQ:MDLZ) surpass the $1 billion level. The firm has taken this decision to reflect its priority of growing its snacks business globally and maintaining long-term growth.

Mondelez International, Inc. (NASDAQ:MDLZ) is being seen as one of the stable stocks to own in the consumer staples sector as investors are finding ways to generate healthy returns during rising interest rates, inflation, and a slowdown in growth. Mondelez has also been impacted by the conflict between Russia and Ukraine as it had to halt production from a potato-chip plant located in the vicinity of Kyiv since March this year. However, Mondelez International, Inc. (NASDAQ:MDLZ) has announced that it will restart operations next week after making repairs to the plant due to the serious damage caused by the conflict. The company will continue to make the repairs even after production is resumed.

Out of the 912 hedge funds in Insider Monkey's database, 48 funds held a stake in Mondelez International, Inc. (NASDAQ:MDLZ) as of Q1 2022.

6. General Electric Company (NYSE:GE)

Number of Hedge Fund Holders: 51

Nelson Peltz's Trian Partners' Holdings: $368,390,000

Percentage of Nelson Peltz's Trian Partners' Portfolio: 6.16%

Stock Price as of June 29: $63.69

General Electric Company (NYSE:GE) is a Boston, Massachusetts-based diversified industrial conglomerate with a focus on aviation, energy, healthcare, and financial services.

General Electric Company (NYSE:GE) is in the middle of spinning off its healthcare division as an independent and separate publicly listed entity by early 2023. The division is home to 48,000 employees globally and has one of the best profit margins among all the divisions. However, the stock price of General Electric Company (NYSE:GE) has struggled due to supply chain challenges following the start of the conflict between Russia and Ukraine. Furthermore, General Electric Company (NYSE:GE) has also been impacted by the COVID-19 lockdown in China during Q1 2022.

General Electric Company (NYSE:GE) recorded a 1% YoY increase in the top line during Q1 2022 to $16.4 billion. The company was able to capture new orders of $18.9 billion, reflecting a positive book-to-bill ratio of 1.15x.

Here's what Vulcan Value Partners said about General Electric Company (NYSE:GE) in its Q3 2021 investor letter:

“During the quarter, we sold our positions in General Electric Co. General Electric is a company we followed for a long time. In the past, we removed GE from the MVP list due to management’s poor capital allocation decisions which resulted in value instability. Larry Culp, the former CEO of Danaher, became CEO of General Electric in 2018. The company implemented a vast restructuring program to simplify the industrial side of its business, sold off non-core assets, paid down debt with the proceeds, and drastically shrunk GE Capital. These restructuring activities allowed its world-class jet engine and healthcare businesses to shine through, and improved value stability. As a result, we added the company back to the MVP list. While the pandemic negatively impacted General Electric’s aviation business in the short run, it also gave us the opportunity to buy General Electric in the second quarter of 2020 with a substantial margin of safety. GE is a good example of a competitively entrenched, yet slower growing MVP business. As its stock price rose rapidly over the last year, its value growth did not keep up, and the price to value gap closed quickly. As our margin of safety diminished, we sold our position in GE and allocated to more discounted companies.”

Overall, 51 hedge funds reported owning a stake in General Electric Company (NYSE:GE) at the end of Q1 2022.

In addition to General Electric Company (NYSE:GE), Nelson Peltz also has a stake in companies like Sysco Corporation (NYSE:SYY), Janus Henderson Group plc (NYSE:JHG), and The Wendy's Company (NASDAQ:WEN) as of Q1 2022.

 

Click to continue reading and see Billionaire Nelson Peltz's Latest Portfolio: Top 5 Stock Picks.

 

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Disclose. None. Billionaire Nelson Peltz's Latest Portfolio: Top 7 Stock Picks is originally published on Insider Monkey.