Trian’s $25 million battle for Disney board seats could be Nelson Peltz’s last fight as the most powerful activist investor on the market

Trian’s  million battle for Disney board seats could be Nelson Peltz’s last fight as the most powerful activist investor on the market
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Nelson Peltz
Nelson Peltz, Founding Partner and CEO, Trian Fund Management

  • Nelson Peltz’s hedge fund, Trian Partners, is waging a $25 million war for Disney board seats.
  • Trian was once the “most feared” activist hedge fund, but its power may be waning, The Journal reported.
  • If the bid for control at Disney fails, the outlet noted it might be Trian’s last major proxy fight.

As Trian Partners — Nelson Peltz’s hedge fund — wages a multimillion-dollar proxy war over two Disney board seats, some wonder whether this is the last big fight for the 81-year-old activist investor, The Wall Street Journal reported.

Trian and Peltz, by extension, were once the “most feared” activist hedge fund investors on the market, The Journal reported, securing massive stakes in Pepsi, Heinz, and Procter & Gamble and successfully taking over board roles in several major companies to shake up internal operations.

But the firm has floundered at times, with the outlet reporting investors notified Trian of plans to pull more than a billion dollars from the fund in recent years as its performance soured, due in part to an ill-timed 2015 backing of GE, which temporarily had Trian holding over $500 million in losses — though it eventually broke even.

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The California State Teachers’ Retirement System and The New York State Common Retirement Fund were among the investors who told Trian they’d planned to pull their funds from the firm’s management, per The Journal, with the latter planning to pull more than a billion dollars alone. Trian’s assets, the outlet reported, have slipped from about $12.5 billion in 2015 to about $10 billion now, with his money now coming largely from investors in Asia and the Middle East.

With the faltering track record and Peltz’s sons, Matt and Diesel, now taking a more active role at Trian, The Journal noted some industry insiders are questioning whether the Disney battle will be Trian’s last high-profile fight.

The Journal spoke with roughly two dozen people familiar with Trian’s leadership circle and internal workings for its report. However, the outlet did not name specific sources who questioned the firm’s future.

Representatives for Trian did not immediately respond to requests for comment from Business Insider.

Trian has invested roughly $25 million in its battle for control over two Disney board seats in the election set for April 3. The hedge fund currently holds a 1.8% stake in Disney — roughly 32.3 million shares, worth $3.6 billion, per Variety.

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A smaller investment firm, Blackwells Capital, which owns roughly $15 million worth of shares, according to Reuters, is also gunning for the seats in what The Journal reported last month is anticipated to be the most expensive fight between shareholders ever.

Trian sent a letter to Disney shareholders earlier this month blasting Disney’s management for a decade of underperforming in the stock market, citing “years of seemingly poor choices and failed strategies” as reason Trian should take more control of the entertainment company.

Disney’s current CEO, Bob Iger, served in the role for 15 years before his contract expired in 2020. Following a short-lived retirement, Iger returned to the role in 2022 after his replacement, Bob Chapek, was fired by the board.

Though Disney had flourished under Iger, Bloomberg reported the company was in “worse shape” than he anticipated when he returned to lead the company, and it has been a slowgoing process to try to recover the company’s share price from the hit it has taken over the last two years.

Disney has fought back against Trian’s claims and defended its stock performance in a recent investor presentation titled “Correcting Trian’s Fiction with Facts,” which a spokesperson for the company referred BI to when reached with a request for comment about the upcoming board vote.

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The Disney spokesperson did not respond to additional questions from BI but pointed to a recent statement to investors from Iger regarding the vote.

In it, Iger defended the company’s recent performance, reiterated his enthusiasm to have come back to the company, and stressed his plans to return Disney “to a place where we’re consistently delivering shareholder value.”

“Which is why the major distractions we’re facing from activist investors are exactly what we don’t need,” Iger said in the recorded statement, with a sample ballot with Trian and Blackwells’ board nominees names crossed out. “I’m urging you to vote for the Disney board’s recommended slate of nominees on the white proxy card — and not to vote for the nominees presented by these activist hedge funds.”

Read the original article on Business Insider

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