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Distinguishing between activist's management of investment funds and management of enterprises


For the initial statements of Professor Sonnenfeld in response to the television interview of Trian's Nelson Peltz, and for Professor Sonnenfeld's original op-ed commentary on the broader issue of activist fund managers' performance as enterprise managers, see


Sources: Wall Street Journal, April 16, 2015 letter responding to Wall Street Journal, April 9, 2015 letter



The Trian Fund Protests Too Much

DuPontís soaring current performance predates any Trian involvement.


April 16, 2015

I want to correct any misconceptions from Trian CIO Ed Gardenís April 10 letter regarding my April 2 op-ed ďActivist Shareholders, Sluggish Performance.Ē I am more focused on the mediocre performance following Trian Fund Managementís board service than its investor success. An investor should care what happens beyond the media drama of the initial investmentís stock pop.

The entire costly, distracting DuPont proxy battle is over Trian founder Nelson Peltzís requirement that he or his principals serve on the DuPont board. So what happens when they join boards? Five out of 11 boards Trian has joined since Trianís inception well underperformed the S&P 500 during the period of its service.

Trian had multiple disasters in the chemical industry, including when, in 2009, it quit the board of chemical company Chemtura a week before Chemtura declared bankruptcy.

While DuPontís proxy battle isnít about how Trian performs as an investor, looking over the past three years, Trianís cumulative returns at 54% are far below the S&P 500 at 74.6% and far lower than several leading activist funds. That is not cherry-picking random years. Trian filed an SEC correction April 3 on Mr. Peltzís performance overstatement.

DuPontís soaring current performance predates any Trian involvement. Does Trian want to suggest it inspired DuPontís engine of innovation through history such as nylon, rayon, Teflon, Mylar, Neoprene, Tyvek and Lycra?

This 212-year-old global icon is one of the top three largest, most profitable, efficient, integrated chemical companies in the world, whose continuing innovation, employment and economic contributions should be celebrated, not hacked up in fire-sale auctions.

Prof. Jeffrey A. Sonnenfeld

Yale School of Management

New Haven, Conn.


We Activists Have Beaten the S&P

We have generated a return of approximately 137% net of fees since inception, outpacing the S&P 500.


April 9, 2015 4:16 p.m. ET

Jeffrey Sonnenfeldís April 2 op-ed ďActivist Shareholders, Sluggish PerformanceĒ misrepresents data to present a misleading picture of Trianís performance. The fact is we have generated a return of approximately 137% net of fees since inception, outpacing the S&P 500 by approximately 2,900 basis points. Shareholder returns for Trian portfolio companies on which Nelson Peltz served or serves on the board, from the day we invested until today, outperformed the S&P 500 by an average of almost 900 basis points annually.

Mr. Sonnenfeldís selective use of data is blatant in citing Trianís returns for 2014 and 2012óbut not including 2013. Not only is his 2014 figure wrong (our return was actually 11% net of fees), but he omits 2013 when we were up 40% net of fees, significantly outperforming the S&P 500.

Mr. Sonnenfeld also leaves out context for DuPontís share price performance. As detailed in our white paper, we believe this performance is largely due to a cyclical recovery and Trianís involvement, not DuPontís earnings which are down since 2011. We donít believe itís a coincidence that the two days of greatest DuPont stock price outperformance versus the S&P 500 since 2009 were the day news first broke that Trian had invested in DuPont and the day Trian released its white paper.

Trian takes pride in working constructively with companies to create shareholder value. That is why we have nominated four highly qualified candidates for election to DuPontís board. DuPont can be great again, but it will require eliminating excessive corporate costs, bureaucracy and management rhetoricóand bringing the highest level of accountability to the boardroom.

Ed Garden

Founding Partner and Chief Investment Officer

Trian Fund Management, L.P.

New York


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