Nelson Peltz’s Trian Fund Management is off to a great start this year in terms of performance — but its assets are substantially lower than they were a year ago.
The activist hedge fund posted first quarter gains in the mid-teens — slightly better than the Standard & Poor’s 500 index, which returned 13.6 percent, according to a person familiar with the results.
The firm also reported that it had about $9.2 billion under management at year-end, according to a new regulatory filing. This is down about 23 percent from the $12 billion it was running a year ago. While a 6 percent loss in its main fund last year accounts for some of that decline, the vast majority is due to the expiration of special-purpose vehicles (SPVs), which then require the firm to return capital to investors.
These are investment funds created to invest in specific stocks alongside the main fund to provide additional exposure to an investment. Trian has also experienced redemptions, especially from funds of funds. The firm declined to comment.
Like many activists, Trian runs a highly concentrated portfolio. It only held nine U.S. stocks at year-end.
It has not established any new positions or fully liquidated any positions in the past two quarters. That said, this quarter it has been trimming several big positions.
For example, in mid-February it sold 1.21 million shares of Procter & Gamble for between $98 and $99 per share, reducing its stake in the consumer-products giant to 36.7 million shares, according to a regulatory filing. The stock remains Trian’s largest holding.
Shares of P&G rose more than 13 percent in the first quarter. Last year they were essentially flat. Peltz sits on the company’s board of directors.
In March, Trian reduced its stake in food distributor Sysco by more than 4.6 million shares, most of which were distributed to investors in the special-purpose vehicles. In the fourth quarter it sold nearly one-quarter of its stake at the time. Shares of Sysco gained 6.5 percent in the first quarter. Peltz sits on its board as well.
Meanwhile, in January Trian decided to back off from its threated proxy fight with PPG Industries after the paints and coatings maker agreed to several of the activist’s demands, according to a Reuters report.
In October, Trian disclosed it owned 2.9 percent of the shares and said it wanted to replace chief executive officer Michael McGarry with former PPG chairman and CEO Charles Bunch. The stock returned more than 10 percent in the first quarter.
Bank of New York Mellon, Trian’s third-biggest long, gained a little more than 7 percent for the quarter. Trian chief investment officer Ed Garden sits on the board.
The biggest gainer for the quarter was conglomerate General Electric, which surged about 37 percent. Last year the stock plunged more than 56 percent. Garden joined the board in 2017.
Mondelez International jumped more than 24 percent in the first quarter. In February 2018, Peltz stepped down from the board of the packaged foods company. He was replaced by Trian president Peter May. The hedge fund also cut its stake by more than half in the first quarter of 2018.
Trian’s three remaining positions are long-time holding Wendy’s, nVent Electric, and Pentair.
