Nelson Peltz may be the highest-grossing investor in the country — but he’s far from the most valuable. As the heated proxy fight between Disney CEO Bob Iger and Nelson Peltz of Trian Partners are in turmoil and Disney shareholders are beginning to cast their votes ahead of Disney’s April 3 annual meeting. The question of Peltz’s own investment record has become a contentious point of contention. Some of the country’s best financial journalists have even fallen victim to its echo chamber of misleading myth-making and missed its value-destroying impact.
In a current TV appearancea prominent media journalist stated: “Whatever you think about him and whether or not he should be on the Disney board, it is simply not true… that Nelson Peltz has destroyed the value of companies where he was on the board.” The numbers released by Trian show that from the time Peltz or a Trian partner joins the board to the time they leave, shares gain about 17% on average, which is significantly more than the S&P.”
Another The journalist then responded“One of the questions that has been asked about the Nelson Peltz scorecard is when do you measure it?” Do you measure it only by when he’s on the board? In this case, there is no doubt that the companies in which he was involved actually performed better.”
However, contrary to what both experts say, Trian has fallen dramatically short of expectations in recent years, no matter how you calculate it.
If we measure performance from the time Peltz or a Trian partner joined the board until their departure, the companies in which Trian held an interest did so actually -6% worse than the S&P per year, on average. As we were the first to reveal it A a year agowith others like Disney And The Wall Street Journal We then confirm ours analysisin a total of 22 cases in which Peltz or a Trian representative sat on a board, 15 of these cases, or about 70% His interference with the board resulted in those companies underperforming the S&P 500 throughout Trian’s tenure.
These results are also consistent with statements from CEOs who suffered with Peltz on their boards. According to a youngest New York Times profile von Peltz: “Many said that caring for and feeding Mr. Peltz was time consuming. After Mr. Peltz joined the snack food maker’s board of directors Mondelez InternationalThen-CEO Irene Rosenfeld created a new leadership position to take on some administrative duties while she looked after Mr. Peltz. No one The Times interviewed could recall Mr. Peltz coming to the board with bold ideas that no one else in the company had ever thought of.”
This doesn’t even begin to take into account how Peltz pressures some of the companies on whose boards he sits to pay for his personal expenses; for example, by forcing Wendy’s to refund him ~$600,000 In “professional security services” each year.
And like us wrote earlier, also in cases where his investments were successful, companies like PepsiCo and P&G was largely successful do the opposite from what Peltz advocated. At Pepsi, despite Peltz’s 2014 Saber rattlingCEO Indra Nooyi wisely refused to do so sell North American and international drinks, lift up Frito Lay, or staple together Pepsi’s winner with Peltz’s Loser against Mondelez.
At P&G, Peltz’s two main ideas are: move its headquarters to Cincinnati “just to disturb you” and too Decentralization of M&A across business units– were wisely rejected.
This week’s chaos at struggling packaging goods giant Unilever –with mass layoffs, brand dismemberment and organizational unrest– was laid at the feet of the activist investor, according to new Peltz-backed CEO Hein Schumacher, who claimed the board member was “completely behind schedule” a recently developed strategy to revive the troubled maker of Dove soap and Ben & Jerry’s ice cream
Since Peltz joined the board, Unilever shares have lagged the lowest S&P 500 benchmark by 14%. Unlike its consumer goods competitors, Unilever has done this too decided to stay in Vladimir Putin’s Russia– quite the opposite, as it was once a leader in brand quality and the company’s social impact under former CEO Paul Polman.
Nor can Peltz claim to be a master of market timing: he has been known to make predictions that GE’s stock price would double before the stock plunged 75%.
Trian tries to change the goalposts – but an implosion occurs
Trian doesn’t factually dispute that throughout their tenure on the board they underperformed the S&P 500 in about 70% of the cases where Peltz or a Trian representative was on the board, but they complain that “we believe it is important to measure performance from the time of Trian’s involvement through Nelson Peltz’s tenure on the Board and beyond.” not just the period between Peltz joining and leaving the committees – without taking into account the fact that times were better for her, Trian themselves have publicly praised this methodology which they now peremptorily dismiss. As a matter of fact, Trian was always bragging about how companies with Peltz on the board outperformed the S&P 500 during Peltz’s tenure on the board.
Regardless, Trian’s overall investment record from the day it was purchased to the day it was sold, regardless of board service, remains abysmal, even if we change the targets as Peltz now wants. The Wall Street Journal’s Lauren Thomas and Cara Lombardo reported exclusively that Trian’s cumulative return in its flagship mutual fund from 2019 to 2023 was 59%, compared to 87% for the S&P 500. On an annualized basis, Trian was underperformed the S&P 500 by more than 4% annually over the past five years, with an annual return of 9.7% for Trian compared to a 14% annual return for the S&P 500 over the same period.
Trian’s underperformance versus the S&P 500 wasn’t just limited to the last five years. Actually, Trian was fired as an investment manager in the Disney pension plan in 2021 after Trian’s underperformance The S&P 500 is up more than 5% on an annual basis over an eight-year period since 2013. Disney suggests this may have been motivated Peltz’ revenge tour.
As answer to the revelation of Trian’s general underperformance versus the S&P 500 in the last decade, Trian claims that it has somehow outperformed the S&P 500 since its inception in 2005 – in a way refuses to release its comprehensive monthly or annual performance data or even the smallest piece of evidence to support this astonishing claim.
Most activist investors communicate their superior performance transparently—and it’s hard to take Peltz’s unlikely claims seriously when he He regularly makes claims about his own performance that are later refutedwith a long track record of filing regulatory corrections with the SEC When we called him out because he previously overestimated his performance.
Trian also points out that this is often the case, even if their investments underperform the S&P 500 positive absolute returns– ignoring the fact that investors could often have achieved higher returns by purchasing government bonds.
In recent years there has been one Rush of American and European investors Exit from Peltz’s funds. Last year he had to close its UK fund due to investor withdrawals. In the meantime, The abandonment of him by major US pension funds caused his total assets under management (AUM) to plunge by 40% from $12.5 billion in 2015 to less than $8 billion today. No wonder they are so competitive The activist investor had to rely on Ike Perlmutterhis octogenarian co-conspirator in the anti-Iger vendetta, almost to finance it 80% of the war chest caused by tantrums. Even Peltz’s top lawmakers are fleeing in droveswith the former heir to the throne and son-in-law Ed Garden No longer in conversation with Peltz after leaving the company and Acknowledge that the business model is broken.
Peltz’s 25th desperate attempts to join the Disney board should be considered last Flickering flame of the flailing financier. This week, Disney’s largest shareholder, George Lucas, aptly commented on Peltz that entertainment “no amateur sport.” Actually as brazen but unfortunate investor When it comes to consumer and industrial goods, Peltz’s only background is in the entertainment industry comically naive, growling filibusters on television.
Jeffrey Sonnenfeld is the Lester Crown Professor of Management Practice and Senior Associate Dean at the Yale School of Management. In 2023, he was named “Management Professor of the Year” by Poets & Quants magazine.
Steven Tian is director of research at the Yale Chief Executive Leadership Institute and a former quantitative investment analyst at the Rockefeller Family Office.
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