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The Morning Brief: Trian’s Peltz Teases Next Big Target
Activist investor Nelson Peltz teased that he started buying shares in a new position about two weeks ago. However, so far mum’s the word as to the identity of the company. Speaking on CNBC, Peltz, the co-founder of Trian Fund Management, said, “We bought quite a bit of stock and we’ve got quite a bit more to buy.” He added that he hopes to hold confidential discussions with management and the board of directors before he announces the target publicly — or before it gets into the press.
Trian likes to run a very concentrated portfolio. At the end of the third quarter, the firm disclosed holding seven long positions in U.S. stocks valued at about $10.2 billion, led by Sysco, General Electric and Mondelez International. One year ago Trian owned 12 U.S. stocks. Its offshore fund, Trian Partners, was up nearly 9 percent for the year through November 25.
“I think the Trump rally is celebrating that capitalism is back,” Peltz said, referring to the stock market’s post-election surge.
President-elect Donald Trump’s romance with hedge fund managers and other billionaire Wall Street types took him to Long Island Saturday evening to attend a costume party hosted by Robert Mercer, co-president of hedge fund giant Renaissance Technologies. Mercer was also a major supporter and fundraiser for Trump, donating $2 million to a super PAC supporting Trump. Trump dressed as himself at the event, called “Villains and Heroes,” while former campaign manager Kellyanne Conway dressed as Super Woman, according to Politico, citing a pool report. Also attending was Steve Bannon, a key Trump advisor. However, Trump’s wife and future first lady, Melania, and his children did not attend.
UBS raised its price target on activist favorite Baker Hughes, from $62 to $73, after the oil services giant announced in late October it plans to combine with GE’s oil and gas business. Under the deal, Baker Hughes shareholders will receive a special one-time cash dividend of $17.50 per share and 37.5 percent of the new company, while GE will own 62.5 percent of the company. In a note to clients, UBS says the merger “will materially” diversify Baker Hughes’ product mix across the energy chain.
At the end of the third quarter, San Francisco-based ValueAct Capital was the third-largest shareholder of Baker Hughes, with a little over 7 percent of the shares. It is also the hedge fund’s second-largest position. The stock is also the third largest U.S. equity long position of Brevan Howard. Shares of Baker Hughes climbed 1.55 percent, to close at $66.31.
Carlson Capital has raised its stake in Forestar Group Inc. to 6.4 percent. Back in February, the energy and natural resources company reached a settlement with Carlson and El Segundo, California money management firm Cove Street Capital. Under separate deals, Forestar agreed to appoint two new directors, who would replace two current directors who resigned. Carlson and Cove Street also agreed to vote in favor of the board’s director nominees and other proposals the board recommends to shareholders.