Sonnenfeld over activist fund performance
Matthew J. Belvedere
Thursday, 2 Apr 2015 | 4:06 PM ET CNBC.com
Activists push back
Thursday, 2 Apr 2015 | 7:21 AM ET
CNBC's Scott Wapner
reads a statement from Nelson Peltz and Trian Partners,
defending their performance. And Jeff Sonnenfeld, Yale School of
Management, defends his critical comments.
Management expert Jeffrey Sonnenfeld is going after activists
investors—saying Thursday ordinary investors would do better putting
their money into the stocks of the target companies than the
investment firms on the attack.
Activists "should be held to the same accountability that their target
firms are under," the Yale School of Management senior associate dean
a position he took in a Wall Street Journal op-ed.
In a "Squawk
Box" interview, Sonnenfeld singled out Nelson Peltz's Trian
Fund: "Last year ... Trian came in at 8.8 percent return. The S&P was
"That's just the facts," he said.
defended itself in a statement to CNBC:
"Mr. Sonnenfeld has twisted and cherry-picked the data to present
a highly misleading and inaccurate picture of Trian's performance.
The fact is that Trian has delivered excellent results for our
investors, which is why we have $12 billion in AUM [assets under
management]. Our flagship fund has generated a 137 percent return
net of fees since inception in November 2005, outpacing the S&P
500 by 2,900 bps [basis points]. And if you look at our core
positions from the day we invested until today, we have
outperformed the S&P 500 by an average of 764 bps annually. That
outperformance increases to 879 bps for companies on which Nelson
Peltz served on the board."
Sonnenfeld responded to Trian's statement, insisting that Trian is
"underperforming their own target companies" such as
DuPont, the chemcial company locked in a proxy war with
you put $100 in DuPont when Ellen Kullman became CEO [in 2009], that
would be worth $240 today," according to Sonnenfeld's calculations.
you put it into the S&P 500, it would be about $200," he continued.
"If you put it into Trian, it would be worth $190."
has proposed adding Peltz and another nominee to DuPont's board as
well as two other nominees to the board of a unit DuPont plans to spin
is planning to spin off its performance chemicals business, but Peltz
wants the company to separate its nutrition and health, agriculture
and industrial biosciences divisions from its volatile but cash
flow-strong materials businesses.
has rejected the proposal, stressing that keeping its businesses
together would allow the company to benefit from its science platform,
global scale, market access and brand.
CNBC interview in March, Peltz said breaking up the company would be
"the most efficient way" to get rid of $2 billion to $4 billion in
company's shares have risen nearly 9 percent since Trian went public
with its break-up proposal in September.
is a huge sea change. If we were having this discussion ... 25 years
ago we have many of the same people [like Peltz]. They were called
sharks, raiders ... at that time," Sonnenfeld argued.