As those who follow Disney (DIS) already know, famed activist investor Nelson Peltz recently announced that he and his firm, Trian Fund Management, have accumulated a large position in Disney, notes Nate Pile, editor of Nate's Notes.
They are seeking a seat on the company's Board of Directors in order to help push the company to make some of the changes that Trian believes will benefit shareholders (and, of course, this includes Trian).
While it is true that Peltz has led other successful proxy fights in the past (and often gone on to unlock shareholder value after winning), I have to admit that I am somewhat puzzled by Trian's decision to continue moving forward with their campaign.
They were likely already building a position and strategy before it was announced that Bob Iger was returning to Disney as CEO — and, to be honest, now that Bob Chapek is out and Bob Iger is back in, I'm not sure if Peltz and his team will add anywhere near as much value to the conversation as they would have prior to Iger's return.
The good news is that Trian's presence will likely provide a catalyst for lots of intelligent discussion about what Disney might be able to do to get the train back on the tracks.
The bad news is that sometimes “too many cooks spoil the broth,” and given Iger’s unique background and skill set, this may be a case where Peltz and his team may prove to be more of an unnecessary annoyance than anything else (and, in fact, could get in the way of Iger moving things forward if they try to push too hard).
My gut feeling is that, as time goes by, Peltz will get to give his advice, Iger will get to acknowledge it, and Peltz and shareholders alike will end up being happy with whatever set of changes end up being made; consequently, I am currently viewing the turn of events as a positive, even if I may have to change my tune later if the conversation starts to turn uglier.
That being said, I am somewhat concerned that some of our “big name” stocks that have been tracing out ugly chart patterns for a while now may experience another leg down if the market does start to head south again — and Disney is one of these stocks.
However, the stock is still flagged as a “first buy” for new money, and you are encouraged to work on building a position at current prices if you are still underweighted in this iconic company.
