Imagine a business valued at a third less than its assets, where management fees had rivalled shareholder returns. Surely this is the kind of laggard a top US activist should sort out? Not if the business in question — UK-listed Trian Investors 1 — is already run by top US activist Nelson Peltz. Instead, a small UK fund called Global Value is leading a group that wants to replace most of the board.
Irony comes fitted as standard on UK feeder funds such as Trian 1. US activists including Peltz, Dan Loeb and Bill Ackman set these up to garner foreign capital for forays against big corporates. But the feeder funds can be tempting targets themselves for smaller activists.
Shares often trade at a discount to net asset value, creating profit opportunities for investors if they can close the gap. Trian 1’s illiquid stock was recently quoted at 34 per cent less than its most recent published NAV of £393mn.