Nelson Peltz's Trian Partners Boosts Ingersoll Rand Stake

Nelson Peltz's activist investment firm Trian Partners has filed an amended 13D with the SEC regarding its position in Ingersoll Rand (IR).  Per the filing, Trian now owns 6.2% of the company with over 17.9 million shares.

This marks an increase of over 5.9 million shares since the end of 2013.  The filing notes that Peltz is not seeking re-election to IR's board due to his recent appointment to Mondelez's (MDLZ) board.

Late last year, Ingersoll Rand spun-off Allegion (ALLE), a commercial and residential security business and Trian also owns shares in this business.  After this spin-off, IR is now focused on transport refrigeration and heating, ventilation and air conditioning.

Trian's fourth quarter 2013 letter to investors notes that, "We believe innovation-led market share gains and a recovery in commercial and residential construction markets will help grow the top-line while continued productivity improvements should drive more margin expansion at IR."

Trian Discloses Allegion Stake, Spin Off From Ingersoll-Rand

Nelson Peltz's activist investment firm Trian Fund has disclosed a new stake in Allegion (ALLE) via a 13G filed with the SEC.  Per the filing, Trian now owns 5.9% of the company with over 5.7 million shares.

Allegion is a spinoff of securities businesses from Ingersoll-Rand (IR) and shares started trading at the beginning of December.  Shareholders of IR stock received 1 ALLE share per every 3 IR shares owned.

As of November, Trian owned also over 18.7 million shares of IR.

For more on this investor, head to Nelson Peltz's presentation at Invest For Kids Chicago.

Trian Partners Sells Danone & State Street, Trims Family Dollar & Ingersoll Rand Stakes: Q2 Letter

Nelson Peltz's investment firm Trian Partners recently released its second quarter letter.  In it, they detail that they sold out of their investment in Danone (DANOY) as well as State Street (STT).  Additionally, the firm mentions that it has recently trimmed its positions in Ingersoll Rand (IR) and Family Dollar (FDO).


New Mystery Investment

Peltz has built a new mystery position which he did not reveal in the letter.  He said that some of the above stakes were sold in order to partially fund their new mystery purchase.

Here's all they had to say about this new position:  It's "a company comprised of world class businesses where we see a path to superior value creation."

Andrew Ross Sorkin said that sources are pointing to Peltz acquiring a stake in DuPont (DD) back at the Delivering Alpha Conference last month, but Peltz didn't really confirm it when asked about it.

At any rate, here's their long portfolio composition by sector: 30% consumer staples, 28.1% consumer discretionary, 17.6% industrials, 13.9% financials, 10.4% basic materials, 0% other.


Other Highlights

Their Q2 letter also touches on their investments in PepsiCo (PEP) and Mondelez (MDLZ) and basically re-hash everything they laid out in their white paper on the companies which we highlighted recently.  Peltz also talked about his PEP & MDLZ stakes at the Delivering Alpha Conference too.

According to the letter, Trian also retains its positions in Lazard (LAZ), Legg Mason (LM), and Wendy's (WEN).  Their thesis on Legg Mason remains unchanged: "Better fund flows, strong free cash flow, and improving margins should allow the shares to be valued closer to peer averages."

In the second quarter, Trian's total firm assets hit an all-time peak of approximately $6.3 billion.  Net exposure finished the month at 100% net long (136.4% long and -36.4% short).

Interviews with Julian Robertson & Jim Chanos: Columbia Business School Newsletter

We wanted to highlight the latest version of Columbia Business School's newsletter: Graham & Doddsville.  In their latest edition, they publish interviews with Tiger Management's Julian Robertson and Kynikos Associates' Jim Chanos,


Below are some excerpts we found insightful from the Tiger Management founder:

Julian Robertson on his investment philosophy: "I believe that the best way to manage money is to go long and short stocks.  My theory is that if the 50 best stocks you can come up with don't outperform the 50 worst stocks you can come up with, you should be in another business ... For my shorts, I look for a bad management team, and a wildly overvalued company in an industry that is declining or misunderstood."

Robertson on evaluating an initial idea: "The first thing is, is the management decent and honest?  A lot of people don't really care about that.  The way to look into that is to do some diligence."

On qualities he looks for in seeding funds: "Competitiveness.  Is he a competitor?"  He references that he often likes athletes due to their will.

Robertson's favorite plays (aside from Google and Apple): "I love WuXi (WX) which is a Chinese-based employment agency for PHDs, primarily in the drug industry ... the company's earnings are certainly increasing beautifully at about 20% a year and it still sells at 10x earnings."



Good insight from the interview with the Kynikos founder:

Jim Chanos on his early experiences in investing and lessons learned: "I recommended a short position in Baldwin-United at $24 ... the stock promptly doubled on me.  This was a good introduction to the fact that in investing, you can be really right but temporarily quite wrong."  (He started Kynikos with $16 million, $1 million of which was his own money.)

Chanos on long versus short: "I've learned there's a big difference between a long-focused value investor and a good short-seller.  That difference is psychological and I think it falls into the realm of behavioral finance ... if you're a short-seller, that's a cacophony of negative reinforcement.  You're basically told that you're wrong in every way imaginable every day.  It takes a certain type of individual to drown that noise and negative reinforcement out and to remind oneself that their work is accurate and what they're hearing is not."

On skills essential to succeed: "Start first with the SEC filings, then go to press releases, then go to earnings calls and other research. Work your way out.  Most people work their way in."

Chanos' current positions: Short natural gas industry in the US, betting against the coal industry.  He also thinks for-profit education business is flawed.  In his Opportunity Fund, he's currently short Chinese property companies and long Macau casinos.  We've also posted some of his other short positions.



The newsletter also features write-ups from MBA students on Avon Products (AVP), Ingersoll-Rand (IR), Legg Mason (LM), and H&R Block (HRB) as well as interviews with Tom Russo and Alexander Roepers.

Embedded below is the full Graham & Doddsville Spring 2012 issue:




For more on these particular investors, we've posted up:

- Jim Chanos on short selling: the power of negative thinking

- Charlie Rose's 1998 interview with Julian Robertson

Nelson Peltz's Trian Fund Goes Activist on Ingersoll-Rand (IR)

Nelson Peltz's Trian Fund Management just filed a 13D with the SEC and revealed a brand new position in Ingersoll-Rand (IR).  Per the filing and as of May 8th, they now own 7.33% of the company with 21,885,406 shares.

Of this stake, 14 million shares are common stock and 7.6 million shares are represented by options.  The started building their position in March and have continued buying into May at prices ranging from the high $39.xx to mid $42.xx

Trian has filed this 13D jointly with the California State Teachers' Retirement System.  As to why Trian acquired they stake, they write:

"(IR) has an attractive collection of businesses, total shareholder returns and profitability have lagged peers, and that there is an opportunity to enhance shareholder value by improving certain key financial, operational, compensation and corporate governance metrics and by considering various strategic alternatives, including a restructuring of its key business segments."

They're seeking addition of new directors to the board, to improve operating margins, and for the company to use "prudent" amounts of leverage to increase the company's stock buyback program.

In Trian's recent letter to investors, they mentioned they've built up 3 new core positions and that they would be publicly revealing them soon.  Ingersoll-Rand is one of them, so we'll have to wait and see what the other two are.

Per Google Finance, Ingersoll-Rand is "a diversified, global company that provides products, services and solutions to enhance the comfort of air in homes and buildings, transport and protect food and perishables, secure homes and commercial properties. IR-Ireland operates in four business segments: Climate Solutions, Residential Solutions, Industrial Technologies and Security Technologies."


Read Trian's commentary on their other positions here.