Nelson Peltz’s Trian Partners Lost 16% in March

(Bloomberg) -- Billionaire Nelson Peltz’s Trian Partners Ltd. saw its portfolio of investments decline by more than 16% in March as the coronavirus pandemic took hold and the market sell-off accelerated.

Those losses add up to almost a 25% decline in its investments this year through March 31, according to a portfolio update obtained by Bloomberg. Trian portfolio companies including General Electric Co. and Procter & Gamble Co. have seen their shares sink 37% and 9.7% respectively for the year. The S&P 500 is down almost 18% this year.

Last year, Trian returned more than 30% on its investments, according to people familiar with the matter who asked not to be identified because it was private.

Trian’s investment in Sysco Corp., which delivers food and related products to restaurants, has been especially hard hit. Shares in Sysco have fallen 46% this year, hurt by a widespread shutdown of its core customer base across the U.S. and Europe. Sysco said last month it would suspend its share buyback program. It drew down $1.6 billion of a $2 billion credit line as the virus weighed on demand.

The New York-based investment firm is also the largest holder in Wendy’s Co., which has seen its share price tumble 33% since the start of the year. The fast food chain also suspended its share buyback program and drew down on its credit line.

Trian’s investment strategy differs from activist hedge funds in that it operates largely as a long-only fund and can often hold its investment for up to seven years in cases where it has a board seat. The lack of hedges makes it vulnerable when markets turn for the worse.

Some of Trian’s hardest-hit investments, including Sysco and Wendy’s, have started to recover in the past week.

A representative for Trian declined to comment.

Trian isn’t the only activist to suffer in last month’s turmoil. Billionaire Christopher Hohn’s The Children’s Investment Fund lost about 19% in March, its worst month since it started in 2004. Dan Loeb’s Third Point Offshore Fund dropped 11% in March.

In a separate letter to investors Tuesday, Trian described some of the issues facing one of its newest investments, Ferguson Plc. The plumbing equipment maker’s shares have fallen about 26% this year. Trian said it expected Ferguson’s business to be “significantly impacted” by the pandemic.

It said that a big portion of Ferguson’s sales comes from residential and commercial remodeling, which is sensitive to the underlying U.S. economy. Ferguson has closed its showrooms and branches to walk-in traffic because of social-distancing rules.

Trian said it was optimistic about Ferguson’s long-term prospects and the value that will be created by its previously announced plans to separate its U.K. business and potentially pursue a U.S. listing.

“Despite the current economic disruption caused by Covid-19, we believe that Ferguson is positioned to withstand a market downturn and continue to believe it will generate attractive returns over a long-term holding period,” Trian said.

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