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Position highlights from Trian Fund’s fourth quarter 13F

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Trian Fund Management files its 4Q14 13F

Trian Fund Management, L.P. is a multi-billion-dollar alternative investment management firm. The fund recently filed its 4Q14 13F. We’ll look at the highlights of its 13F in this series.

At the end of 4Q14, Trian Fund Management’s US long portfolio was worth $9.43 billion, up from $7.6 billion in 3Q14. The fund raised its stakes in E.I. du Pont de Nemours and Company (or DuPont) (DD) and Mondelēz International (MDLZ) during 4Q14.

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An amended 13D filing in December noted that Trian received approval to buy a maximum of 13% of the outstanding shares of Legg Mason (LM). Trian owns 11.3% of the company’s shares according to the latest filing. A statement in December noted that Trian CEO and founding partner Nelson Peltz resigned from the board of Legg Mason to focus on other commitments.

Overview of Trian and its strategy

Trian Management was founded in November 2005 by Nelson Peltz, Peter W. May, and Edward P. Garden. The fund’s objective is to generate significant capital appreciation for investors using Trian’s operations-centric investment strategy. This strategy involves investing in public companies with attractive business models that Trian believes trade significantly below intrinsic value due to operating underperformance.

Trian’s activist targets include Kraft Foods Group, Inc. (KRFT), PepsiCo Inc. (PEP), and Ingersoll-Rand Plc (IR). The latter two are among the top five positions of the fund, according to its latest 13F filing.

Trian believes its core competency is its ability to optimize the profitability of the companies in which it invests. It does so by working constructively with management and boards of directors to execute Trian’s operational and strategic initiatives. Eventually, these initiatives increase a company’s overall value.

The firm’s principals have deployed the fund’s operations-centric investment strategy throughout a variety of market cycles for nearly four decades.

The next part of this series will talk about Trian Management’s latest updates in relation to its position in DuPont.

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