A $3 billion bet on Walt Disney by Nelson Peltz’s Trian Fund Management was largely answerable for the investment management firm’s underperformance last yr compared to its activist hedge fund peers, according to financial details provided to Reuters by a Trian investor.
The previously unreported details illustrate the high financial stakes for Trian because it seeks to shake up Disney’s board in this yr’s highest-profile proxy contest.
Trian’s fund returned 10% last yr, according to the investor, half the 20% return on average that activist hedge funds scored based on data compiled by Hedge Fund Research.
Trian’s position in Disney, which accounted for roughly 40% of its total portfolio at the tip of the third quarter, was a serious contributor to the underperformance.
Disney’s shares ended 2023 up 4%, while the S&P 500 index rose 24%.
A Trian spokesperson declined to comment.
Trian amassed a Disney stake at the tip of 2022 and threatened the corporate with a board challenge in January 2023, criticizing it over losses in its streaming business, poor corporate governance and its succession plan.
Peltz, Trian’s CEO, dropped the board fight in February 2023 after Disney announced an intensive restructuring program that included cost cuts and seven,000 layoffs.
“Now Disney plans to do every part we wanted them to do,” Peltz said on the time.
But as Disney’s shares languished for many of 2023, Trian modified its stance.
It increased its ownership fivefold to roughly 2% of the corporate and accused Disney CEO Bob Iger and the corporate’s board of failing to deliver on its promised turnaround.
Last month, Trian said it might nominate Peltz and former Disney chief financial officer Jay Rasulo to Disney’s board.
The entertainment giant has urged its shareholders to oppose the move, arguing Trian’s candidates could be disruptive to its board.
A shareholder vote on the nominations is predicted to happen in the spring unless a compromise is reached.
ValueAct Capital, one other activist hedge fund and Disney shareholder which, unlike Trian, has been supportive of Disney’s board, returned 39% last yr, Reuters has reported. ValueAct bought its Disney shares later in 2023, long after Trian established its stake, when the stock was closer to its recent lows.
The worth of Trian’s stake in fast-food chain Wendy’s, where Peltz sits on the board, dropped 15% in 2023.
To make certain, Trian also enjoyed wins last yr. Its portfolio was lifted by double-digit gains in plumbing parts distributor Ferguson and asset manager Janus Henderson Group.
Trian said a yr ago that corporations in which it had invested had outperformed the S&P 500 in total returns by a mean 9% annually while Peltz served on their boards. It has not provided a more up-to-date figure.