A new report details that Trian Fund Management Founding Partner Nelson Peltz has sold off all of his stock in The Walt Disney Company after losing a proxy battle with the company earlier this year.
Nelson Peltz via CNBC
This new report from CNBC‘s Sara Slinas and Scott Wapner details that “Activist investor Nelson Peltz has sold his entire stake in Disney, a person familiar with the matter tells CNBC.”
The duo added, “Peltz sold all of his Disney stock at roughly $120 a share the person said, making about $1 billion on the position. The stock currently trades for about $100 per share.”
Mickey Mouse via Disney Parks YouTube
Peltz and his Trian Fund Management firm has long criticized The Walt Disney Company and challenged the company to make significant changes. In January 2023 he declared that The Walt Disney Company “is a company in crisis with many challenges weighing on investor sentiment.”
Specifically the firm detailed the company has poor corporate governance, poor strategy and operations, and poor capital allocation. The firm also noted it wanted to “refocus the creative engine to drive profitable growth.”
Peltz would eventually pull away from the proxy fight in February 2023 explaining, “We congratulate Disney and Bob Iger on their recently announced operating initiatives, which are a win for all shareholders and broadly align with our thinking. We are pleased with the role that Trian was able to play in helping to focus the Board to take decisive actions which we believe will lead to better financial results. We were also pleased to see the Company’s pledge to restore the dividend.”
Nelson Peltz via David Rubenstein YouTube
However, he would reignite the proxy battle in November stating in a press release, “Since we gave Disney the opportunity to prove it could ‘right the ship’ last February, up to our re-engagement weeks ago, shareholders lost ~$70 billion of value. Disney’s share price has underperformed proxy peers and the broader market over every relevant period during the last decade and over the tenure of each incumbent director.”
He added, “Investor confidence is low, key strategic questions loom, and even Disney’s CEO is acknowledging that the Company’s challenges are greater than previously believed. While James Gorman and Sir Jeremy Darroch represent an improvement from the status quo, the addition of these directors will not, in our view, restore investor confidence or address the root cause behind the significant value destruction and missteps that this Board has overseen. Trian intends to take our case for change directly to shareholders.”
Mickey walks down Main Street USA at Disneyland. (Credit: Mortimer Productions)
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As noted above, Peltz lost his proxy battle. However, he indicated he might return next year if the Board of Directors and Disney’s leadership did not make significant changes to improve the company and its performance.
He told CNBC, “I hope this is not a redo of last year, where we pulled out, gave management a chance, and the stock went down from roughly $120 down to $79. I hope that doesn’t happen this time. Whether we stay or not, we don’t make those kind of announcements.”
He continued, “I hope Bob [Iger] can keep his promises. I hope they can do all the things they assured us they were going to do. And we’ll only watch and wait. If they do it, they won’t hear from me again. If they don’t, Jim [Cramer], you may be seeing me on your show next year doing this same thing again.”
“So, it’s really up to management, it’s up to the board, it’s up to whether they do what they say they want to do, or if it’s the same old story again,” Peltz went on.
He specifically took issue with the company’s succession plan, “Look, they’ve got to get a succession plan firmly in place that works. We haven’t seen one going back to 2011, they began talking about succession. We’re 13 years from then and they haven’t come up with anything.”
“They’ve got to get the margins up, they got to get streaming right. They made a lot of promises. And, frankly, as a shareholder, I hope they keep them, but if not we’re here,” Peltz said.
Jonathan Majors as Kang The Conqueror in Marvel Studios’ ANT-MAN AND THE WASP: QUANTUMANIA. Photo by Jay Maidment. ©: Nelson Peltz And Trian Blast Bob Iger And The Walt Disney Company’s Board After Netflix’s Annual Report Shows “Impressive Performance”
Furthermore, he added, “Look, I’m willing to give them the opportunity to prove me wrong. I’m willing to give them the opportunity to do as they say. The shareholders who voted, they want to give management and the board a chance. So, so be it, we will watch like we did last time.”
“We pulled out a year ago February, a lot of promises were made, we hoped that they were going to keep them. They didn’t. We came back. We’ve got a new set of promises and I hope they keep them. And if they do, I’ll be a guest on your show probably talking about a different company. But if they don’t, you’ll see me again, Jim,” Peltz concluded.
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Bob Iger via CNBC Television YouTube
If this report is true, it’s possible that Peltz has seen enough and was not willing to risk Bob Iger, Disney leadership, and the Board of Directors proving him wrong. However, financial Analyst Valliant Renegade speculates that Peltz has sold off his stock at high point and could potentially buy back in at a much lower price to make another run at a seat on The Walt Disney Company’s Board of Directors.
First, he pointed to the fact that The Walt Disney Company is underperforming the S&P since the most recent earnings call for The Walt Disney Company. He said, “The Walt Disney Company is down some 10% while the S&P is up about three. That right there should give you a very good indication of what Nelson Peltz had on his mind.”
Later in the video, Valliant Renegade explained, “A few key things to understand is number one: Nelson Peltz ultimately got what he needed for his investors and that is a good return on investment. Holding a stock like that for really a few months to a year and then being able to sell it and turning a nice tidy profit at that level makes them very happy. And quite frankly Nelson Peltz doesn’t need to stay involved in Disney stock at this point in time Nelson Peltz, first and foremost, has a fiduciary responsibility to the investors in the Trian fund.”
Next, he detailed, “Now, the next question becomes does this mean if Nelson Peltz is walking away from Disney or not. Well, time will tell on that one. We can’t be sure. We’re too early in the year frankly for that. But I have a feeling now that the Walt Disney Company stock has dropped some 20% from the point that Nelson sold it a month or two ago maybe that means he’s eyeballing it again waiting to see if it drops back down into the 80s and 90s yet another time for him to have an opportunity and an opportunity for his investors in the Trian fund to come back in and make another play at another proxy battle.”
“If that happens we’ll certainly be one of the first people on the street to cover it, but I don’t want people to just jump to conclusions at this point in time and think that Nelson Peltz has thrown his hands up and given up and walked away from trying to help fix the Walt Disney Company. We’ll have to see what Bob Iger and his team manage to do between now and say the fourth quarter of 2024. That’s usually when we start hearing rumblings from Nelson Peltz on something like this if he is going to jump back into of the fry. So stay tuned, but for right now don’t get yourself too concerned on this don’t automatically jump to the conclusion that Nelson is just giving up. I don’t think that’s the case. At least not in so far as it depends on Disney’s performance between now and this time say at the end of the year or next year,” Valliant Renegade concluded.
Bob Iger via New York Times Events YouTube
What do you make of Peltz selling off his stock in The Walt Disney Company?
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I hate all shareholders with a passion they are ONE of the biggest driving forces behind corporate greed, but getting out of Disney stock is a no brainer at this point.
Buy the shares back at $80 per share. Disney is a loser stock.