Nelson Peltz Still Loves Mondelez & PepsiCo, But Drops Sotheby’s

We have gone through the most recent filing from billionaire Nelson Peltz’s Trian Partners; here’s what we found:

No new positions. In most quarters, Peltz and Trian maintain a very concentrated equity portfolio, and this filing was no different. The fund reported that it had $5.4 billion split between just 10 stocks.

The only boost. Likewise, the only boost the fund gave to any of its holdings was in Legg Mason, Inc. (NYSE:LM), the diversified asset management company. After upping its stake by less than 1% in the third quarter, Legg Mason now sits at the No. 6 spot in Trian’s equity portfolio, and shares have boomed in 2013, returning 54% year-to-date.

TRIAN PARTNERS


The main driving factor behind any bull’s investment in Legg Mason is likely the company’s restructuring efforts. It has a new CEO to oversee a fairly large cost-cutting program, in which it closed its international equities unit while initiating layoffs in its auditing division. AUM inflows did grow by 1% over the past year, and long-term margin forecasts are promising due to Mason’s fairly efficient asset manager/affiliate program, not to mention that the broader asset manager industry is trending upward.

The only reduction. Ingersoll-Rand PLC (NYSE:IR), meanwhile, was the only reduction Peltz and Trian made last quarter. The fund cut its stake in the large-cap industrial machinery company by 4% during the period, but it still sits at No. 3 in the equity portfolio. Shares of Ingersoll have risen by 40% year-to-date, driven by a continued recovery in the U.S. housing market, followed by improving health in European markets. The company plans to spinoff its commercial security business in early December, and Peltz’s minor cut should not be taken as a ‘bearish’ signal, per say, due to the fact that he still holds a significant amount of Ingersoll shares. We’ll be watching the spinoff closely, and it’s likely this billionaire will too.

The top dogs. Mondelez International Inc (NASDAQ:MDLZ) and PepsiCo, Inc. (NYSE:PEP) still account for more than 40% of Trian’s equity portfolio, and it seems like just yesterday when Peltz was vocally pushing for both sides to merge their snack food businesses. He’s been pretty quite lately, but the sheer fact that he’s still very bullish on both companies indicates such a plan may still be a possibility. Under Peltz’s plan, Pepsi would buy Mondelez so it could shift its focus away from soft drinks to snacks, which he thinks have greater growth potential in the future. Both stocks have largely tracked the market in 2013, and there’s nothing scary about either from a growth or valuation standpoint. We’ll be watching closely.

A couple big sales. Interestingly, it appears that Peltz wants nothing to do with Dan Loeb’s efforts to boost shareholder value at Sothebys (NYSE:BID). The auctioneer did represent a near $80 million position for the billionaire in the second quarter, but he elected to sell his entire stake last quarter. State Street Corporation (NYSE:STT), meanwhile, was a $120 million position that Peltz elected to cut out of his equity portfolio entirely, as its quite possible that some profit-taking was in order.

Disclosure: none

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