Nelson Peltz Is In a League of His Own When it Comes to Activist Investing

When it comes to activist investing, Nelson Peltz, and Trian Fund Management LLC have managed to set themselves apart from the pack.

Peltz, who will keynote at The Deal’s 2018 Corporate Governance conference on June 7, gained credibility among the institutional investor class following his acquisition and turnaround of Snapple Beverage Group in the late 1990s.

The move has imprinted Peltz, and Trian with the ‘operational activist’ moniker and set the investor apart from ‘financial activist’ funds, often hedge funds without operational backgrounds which focus on balance sheet initiatives such as hiking leverage and making capital distributions.

Today, 75-year-old Peltz, and Trian, which has about $10.8 billion in assets, have put themselves in a league of their own not only because of the tactics employed during insurgencies but also with the size of companies they are willing to go after. Peltz, Trian co-founders Ed Garden, Peter May and the fund’s team concentrate a lot of their energy at truly large-cap publicly-traded corporations.

Consider that Peltz scored a seat on the board of Procter & Gamble (PG) in December, a position that was offered to him in a settlement after he ran the largest director-election battle in the history of proxy fights, considering the packaged goods company’s whopping $177.5 billion market capitalization.

But it’s not just P&G. A contest Peltz narrowly lost in 2015 at DuPont ultimately drove the chemical giant to combine with Dow Chemical in a $150 billion merger to create DowDuPont Inc. (DWDP) , which will break up into three companies in the months to come.

The DuPont victory suggests that even with a loss, Peltz’s campaigns can have an impact on a company’s future especially if its share price and total shareholder returns are lackluster in the months and years to come. After Peltz threatened to come back in 2016 with another contest, DuPont CEO Ellen Kullman resigned. Peltz told The Deal at its 2016 corporate governance conference, “Shareholder Activism and Value Creation,” that her replacement, Ed Breen, “blew the doors and the windows wide open” by allowing Trian to sign a confidentiality agreement to help DuPont and Dow Chemical work on developing a multi-part transaction, which Peltz’s team suggested in an October meeting.

Peltz has had a huge impact as chairman of Wendy’s (WEN) , CEO Todd Penegor told TheStreet below.

“We invest with a detailed set of operating and strategic initiatives to grow the top line and achieve best in class margins,” said Peltz. “We ask the leadership of the companies that we invest in to act like they own 100% of the company. We think this approach leads to attractive returns for all shareholders.”

Investors pay close attention to Peltz and Trian, partly because the fund is well-known for taking time-sometimes a year or longer- to produce and disclose lengthy white papers prescribing changes at companies in which it invests – the papers are typically written before the fund buys its first share of stock. At P&G, Trian wrote a 93-page paper, at General Electric Co. (GE) , another major investment that has struggled of late, 80-pages.

Its team meets regularly to discuss potential ideas, most of which are later discarded. A few investment ideas that aren’t cast off are debated by the 16-person Trian team, including partners, research analysts and legal professionals, until they are ready for a campaign.

For now, expect Peltz from his perch on P&G’s board to be focusing attention on whether the massive packaged goods company can successfully integrate a $4.2 billion acquisition of the healthcare unit of Germany’s Merck, a deal announced earlier this month.

A key tenant of his insurgency campaign at the packaged goods company focused on a view that P&G historically has had an overly insular culture. Will P&G keep Merck executives, employees on board? Will it make more bolt-on millennial-focused deals, as Trian also has been seeking? Expect Peltz to be watching.

Peltz attended The Wharton School of the University of Pennsylvania and has been CEO of Trian since 2005. He is currently on the board of Sysco Corp. (SYY) and MSG Networks Inc. (MSGN) as well as P&G. He was previously part of the board at H. J. Heinz Co., Legg Mason Inc., Ingersoll-Rand plc and Mondelz International Inc. (MDLZ) .

Peltz began his business career in 1963 when he joined his family food business, according to Trian’s website.

There’s still time get your ticket to join host Jim Cramer and keynotes Paul Singer, Nelson Peltz, Jeff Gennette and Steve Mollenkopf at the Corporate Governance conference on June 7, 2018 in NYC. Gain insight on methods for managing companies to maximize shareholder value. Registration ends on June 4 so get your ticket today.

Editor’s note: This article was published by The Deal, a sister publication of TheStreet that offers sophisticated insight and analysis on all types of deals. Click here for a free trial.