Yahoo Finance Live anchors discuss consumer product giant Unilever adding activist investor Nelson Peltz to its board.
- Welcome back to Yahoo Finance Live. Let's take a look at what is moving here in the early going, or in the pre-market. Shares of consumer product giant Unilever are up about 6% in the pre-markets, as it announced the addition of hedge fund Tryon Fund Management founder Nelson Peltz as a board member. Peltz will serve as a member of the compensation committee and said he looks forward to helping drive Unilever's strategy, operations, sustainability, and shareholder value.
And Brad, really no surprise here, if you look at Unilever stock price over the past five years, down 22%. The S&P 500 up 70%, Procter and Gamble, a Unilever rival, up 68%. Now, I went back, and I looked at what Peltz did at Procter and Gamble because I covered his campaign very extensively. And I remember one thing that now former P&G CEO David Taylor told me. He said Peltz drove a rallying cry inside of Procter and Gamble.
And I tended to agree at the time, and I still do. There was major change at Procter and Gamble after Peltz arrived on that board. He came out with a 93-page slide deck at the time, really detailing how the business was too siloed, there needs to be more cooperation, there needs to be more investment inside of innovation. And I think he's going to dust off that playbook here at Unilever. And at the end of the day, you have to wonder why in the world is Unilever operating a portfolio that sells Axe deodorant and Hellmann's mayonnaise.
Why are these things still in one portfolio? It makes no sense.
- Well, it's got Ben and Jerry's, too. That's perhaps one of the tastier parts of it. We were just taking a look on the screen a moment ago, I don't know if we can toss that back up, some of the activist campaigns that he's gone through in the past. And you brought up one of them, but look at Kraft Heinz, Mondelez International, PepsiCo, P&G, of course, and Cadbury. You think about all of those brands and what they've kind of gone through in those activist campaigns, and it is very much mirroring what we're hearing in this instance, trying to trim some of the fat around these brands, looking across where they could offload certain divisions, perhaps, that aren't as profitable as they could or should be, or look across the operations and see exactly where they could prioritize margins even more so.
Now, with a brand like Unilever, it's very easy to think about this other kind of theme of shrinkflation that consumers are experiencing right now, too. And does an activist campaign like this add on to what consumers are going to see on the front of shinkflation? I think that's a larger question. If you see package sizes getting smaller, or if you see more air in some of those bags, or perhaps more--
- I don't like to see that. I don't want to see that extra air in my bags.
- Nobody does.
- No, do not want to see that.
- Exactly. Taking a look at, as you were bringing up a moment ago, Unilever versus the S&P 500 over the past five years, down 20%, versus that 72% gain.
- Absolutely, and I will say what Peltz brings-- now, I mentioned-- you should put up Pepsi there. He did lose, technically, on PepsiCo. He was pushing for a breakup of their food and beverage business. But again, he drove, I think, just different types of thinking inside these food companies. You look at a Unilever, and I would bet dollars to donuts here that you have someone reporting to this person. They're reporting to this person. You have 12 people doing this.
They're sending 15 emails, and at the end of the day, nothing is getting done. And I think that really shows up inside of the company. Their profits have underperformed. Their sales of underperform. The stock price down 22% over the past five years, it has not been good. Unilever has not been a good story, and you have to wonder why does it make sense. It doesn't make any sense to be operating all these brands inside of one roof at a time where they're seeing billions of inflation each year.
- Dollars to donuts is the stablecoin hero that we all need.
- Let me add real quick Peltz is a busy guy. He's also-- he's also, now, I would say is pushing for change at Wendy's. That was--
- He's the chairman there.
- He's the chairman there, a longtime player at Tryon, at Wendy's, I should say. So he's a busy guy right now, and I think this pullback in valuations are going to bring a lot more activist investors out of the woodwork over the next few months and try to shake up companies that are just not getting it done.