According to Bloomberg, activist investor Nelson Peltz has scored a quick paper profit of $154 million since he acquired shares of Disney in early November and entered into a proxy fight against returning Walt Disney Company CEO Bob Iger.
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What was starting to shape up to become a feirce battle over the next few months has now become a thing of the past. Despite forfeiting and backing down from a proxy fight for the ages and failing to obtain a coveted board of directors seat at The Walt Disney Company, investor Neslon Peltz will still be walking away with a nice chunk of change on his initial investment he made just three months ago.
Based on the report from Bloomberg last Thursday, shares of Disney briefly spiked to a six-month high, hitting $118 per share early in the trading session. That intraday peak in the stock made Peltz’s stake worth $1.1 billion, representing unrealized profits of just under $250 million. Disney stock has trended lower since that time and traded at $108 on Friday, putting the profits at around $150 million. Based on sources familiar with the investment, Peltz had owned as much as 9.4 million shares of Disney at an average cost of just below $92 per share in November 2022, making the total purchase worth approximately $865 million.
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In a shocking revelation following an interview with Disney CEO Bob Iger on CNBC, Peltz decided to call into the live television network with Jim Cramer to officially declare the proxy fight on Wall Street between his firm, Trian Fund Management, and Disney was over.
He would say, “Now Disney plans to do everything we wanted them to do,” Peltz said Thursday. “We wish the best to Bob [Iger], this management team, and the Board. We will be watching. We will be rooting.”
Peltz had been very critical of Disney’s $71 billion acquisition of Fox in 2019 and failed succession planning. He had also called out “weak corporate governance” over the years that has eroded shareholder value.
Even though it may seem that not Trian did not get everything that the initially wanted, Peltz does seem happy enough with the short-term rebound in Disney’s stock price, having increased 16% from his initial purchase price. Disney is currently up 24% year-to-date, well overperforming the S&P 500’s return of just 6% over the same period.
Peltz could have also realized it was easier at this point to call it a day, take his profits, and halt the proxy fight. Stopping the battle will help both sides save money and allow Bob Iger and his board to focus on the business. Peltz’s Trian Fund said its proxy fight to win a board seat could cost as much as $25 million, but it had only spent $1.6 million soliciting investors for their votes.
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