Train Fund Management’s $3 billion stake in The Walt Disney Co. was the biggest factor behind its underperformance compared with its peers, a Trian investor told Reuters Tuesday.
The fund returned 10% last year, the investor said. That’s half the 20% return on average generated by activist hedge funds in 2023, according to data compiled by Hedge Fund Research. Trian increased its position in Disney as its founder, billionaire activist investor Nelson Peltz, seeks a seat on the entertainment giant’s board.
Trian’s ownership of Disney stock accounted for about 40% of its total portfolio at the end of the third quarter, making it a major weight on the fund’s returns, according to Reuters. Disney shares closed out last year up 4%, compared with the S&P 500 index’s 24% jump.
Peltz launched his first proxy battle in Jan. 2023 but withdrew his nomination after Disney announced cost-cutting measures. As the months went by, the company’s stock and performance continued to lag behind competitors. And so, Peltz again launched a bid for two board seats this time, for himself and former Disney Chief Financial Officer Jay Rasulo.
The pair lamented the direction the company was headed, with Rasulo commenting that “the Disney I know and love has lost its way.” Peltz filed a proxy statement last week, calling on the company to find a clear successor for CEO Bob Iger and push for “Netflix-like margins.”
“It is unfortunate that a company as iconic as Disney and with so many challenges and opportunities has refused to seriously engage with us, its largest active shareowner, about board representation,” Peltz said in the filing.
Iger returned to the Mouse House in Nov. 2022, and has said he will stay on as CEO through 2026.
Disney put forward 12 of its own hand-selected nominees last week, including Iger and former Morgan Stanley CEO James Gorman, and urged shareholders to reject Peltz’s nominations.
The company also noted in a regulatory filing last week that approximately 78% of Trian’s massive position in Disney is owned by former Marvel Entertainment Chair Ike Perlmutter, an executive who had a rocky relationship with Iger that ultimately resulted in the former Marvel Studios head’s complete ouster from the company last March. Perlmutter gave Trian voting control over his Disney shares, the filing said.
Peltz has launched 24 bids for a board since the summer of 2022, according to Disney.
