Nelson Peltz has taken a quite unconventional path to becoming a billionaire. A Wharton School dropout, the investor at one point set his sights on becoming a ski instructor, later deferring the move to drive a delivery truck for a family business.
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Life and Education
Peltz was born in Brooklyn, New York on June 24th, 1942. He enrolled as an undergraduate at the Wharton School of the University of Pennsylvania, where he joined Phi Gamma Delta.
In 1963, the now-billionaire dropped out of school, having decided to move to Oregon and work as a ski instructor. Instead, he wound up driving a delivery truck for A. Peltz & Sons, a food distribution business founded by his grandfather.
Alongside his older brother Robert, Nelson Peltz spent 15 years building A. Peltz & Sons. The firm eventually went public under the name Flagstaff Corporation and was sold in 1978, after having gone bankrupt.
In the ‘80s, Peltz teamed up with Peter May to find new acquisitions. They came upon vending machine and wire company Triangle Industries, which they built into a Fortune 100 industrial company and sold to Pechiney in 1988.
In 1989, Peltz and May founded Trian Group, which provided investment banking and management services for the entities they controlled. In 1992, the firm acquired DWG, the next year changing its name to Triarc Companies, Inc. Peltz remained at the helm of Triarc through 2007, during which time the company sold several holdings in order to focus on food and beverage operations.
Triarc purchased Mistic Brands in 1995 and bought both Snapple Beverages and Cable Car Beverage Corporation in 1997. It sold all three to Cadbury Schweppes in 2000 for $1.45 billion, and unloaded Royal Crown the same year. In 2008, Triarc announced the acquisition of fast food giant Wendy’s. The firm’s name was changed to Wendy’s Arby’s Group, Inc.
In the midst of all of this, Nelson Peltz managed to launch Trian Fund Management with Peter May and Ed Garden in 2005. An activist investment firm, Trian returned 40% net of fees in 2013.
Nelson Peltz as the shareholder’s best friend? Shawn Tully posed the question in a 2007 piece for Fortune. The billionaire’s investment strategy is closely tied to shareholders’ rights, and he is highly accustomed to making an activist push.
The Trian website lays out the hedge fund’s approach:
Trian Partners seeks to invest in high quality but undervalued and under-performing public companies and to work constructively with the management of boards of those companies to significantly enhance value for all shareholders. Trian Partners seeks to improve the long-term earnings power of its portfolio companies through a combination of improved operational execution, strategic re-direction and more efficient capital allocation.
Peltz is a self-described operational activist who targets companies that he believes are performing far below their potential. He often advocates splitting off business units – an approach that seems to work, given Trian’s 55% return net of fees over the past two years and $11 billion in assets under management.
Nelson Peltz has successfully taken his operational activist strategy to numerous companies over the years, including Cadbury Schweppes, Kraft Foods and Wendy’s.
One of Nelson Peltz’s first big drives was at H.J. Heinz, in which Trian disclosed a 5.4% stake in 2006. It waged a six-month proxy fight to win five seats on the firm’s board, resulting in Peltz becoming its director from 2006 through 2013. He is often credited for setting the stage for the takeover orchestrated by 3G Capital and Berkshire Hathaway years later.
In 2007, Trian Fund Management bought a significant stake in Cadbury Schweppes, subsequently encouraging the U.S.-based company to set short-term operating margin targets, sell off beverage assets, add new board members and rebalance its balance sheet. Trian went as far as to create a website, www.triancadbury.com, to outline its thesis. The result: the company’s split into Dr Pepper Snapple Group for beverages and Cadbury for sweets.
Peltz also went after Kraft Foods in 2007, pushing it to sell of its Post cereal and Maxwell House coffee brands. By November of that year, Kraft agreed to add two Peltz-backed board members in return for a promise not to seek control of the company. In 2010, Trian divested of all of its Kraft shares.
But in 2011, the fund returned to Kraft, revealing a $420 million stake. The food giant split in two – Mondelez International for snacks and Kraft Foods Group for groceries – in 2012.
Most recently, Nelson Peltz has taken up activist bids at PepsiCo and DuPont.
The billionaire first went after PepsiCo in 2013, unveiling a plan to break up the beverage giant. The two reached what will serve as, at least, a temporary truce in early 2015, when the announcement was made that William R. Johnson will join the PepsiCo board.
Also underway since 2013, Peltz’s campaign at DuPont is still ongoing. He is pushing for the chemical company to split into two parts – a growth business encompassing agriculture and nutrition, and a more mature entity producing materials, safety products and electronics. In early January, Trian said it would launch a proxy battle for board seats at DuPont’s annual meeting.
“Diversification is for people who don’t have conviction.”
“What’s on the balance sheet is not what’s important, it’s the value of the brand.”
“You can do all your research, but you have to listen to your stomach.”
- Nelson Peltz: Let me tell you about DuPont
- Delivering Alpha unfiltered: Peltz and Moelis
- Nelson Peltz at Harvard Business School