Nelson Peltz’s Trian Fund Management recently raised about $335 million for a new fund, Trian SPV XI, a special-purpose vehicle. The proceeds were used, in part, when Trian recently reported its 7 percent or so stake in Sysco Corporation, the wholesale food distributor. Altogether, as of the end of July the New York firm had $11.5 billion in assets under management and callable commitments. This is up 31 percent from just the end of the first quarter of 2014. Its Trian Partners, one of its main hedge funds, is up 3.8 percent this year through mid-August.
Separately, after Thursday’s close Sysco announced that it added Nelson Peltz, chief executive officer and a founding partner of Trian, and Josh Frank, a Trian partner, to its board of directors. This expands the board to 12 members. Peltz will join the board’s corporate governance and nominating committee and Frank will join the compensation and finance committees.
Are hedge fund investors growing more disenchanted with their managers? After all, a new Preqin study of institutional investors and alternative investments in general found that 20 percent of investors in hedge funds have a negative perception of the asset class. One possible reason for this disappointment: Just 10 percent feel manager performance exceeded expectations over the past 12 months, while 40 percent felt it fell short of expectations.
Looking ahead, just 19 percent of surveyed hedge fund investors plan to invest more capital over the coming year compared with the past 12 months, while one-third plan to invest less capital. “Investors have identified performance and fees as the key issues in the year ahead, suggesting that the value of hedge funds is something that many investors are actively scrutinizing,” the study points out. Altogether, the Preqin study found that 79 percent of institutional investors have an investment in at least one alternative asset class and more than half have an allocation to each of the three most targeted classes — hedge funds, private equity and real estate. The most common reasons for these investments are diversification, high returns, reliable income streams and inflation hedging.
Shares of Arch Coal surged 47 percent on an otherwise dismal day on Wall Street. The stock has now more than tripled since its August 5 low. Three high profile hedge fund firms are among the 11 largest shareholders, including New York-based Millennium Management and D.E. Shaw & Co., and East Setauket, New York-based Renaissance Technologies. In addition, George Soros’ Soros Fund Management, which no longer manages hedge funds since Soros returned all of his outside capital, bought a new stake of 553,000 shares in the second quarter. Alas, the stock is still down nearly 90 percent since its high a year or so ago.
In a disastrous day for the market and for high-flying technology stocks in particular, hedge fund favorite Micron Technology fared especially poorly, plunging more than 7 percent to a new low of $14.74. New York-based Greenlight Capital and Boston-based Baupost Group remained top-10 holders in the second quarter.