Mondelez International Attracting Big Name Investors Like Ackman and Peltz

News of Nelson Peltz’s Trian Fund Management ridding itself of all Kraft related positions turned out to be off…very off. In an amended Q4 13F filing released last week, the hedge fund revealed a large stake of over 19 million shares (a bit more than $600m worth) in Kraft’s international snacks spinoff Mondelez International (MDLZ). There was still no position listed for the Kraft Foods Group (KRFT) so he must have unloaded that one. Based on that info and the ~8m pre-spin Kraft shares Trian owned in its September 30th filing, it is possible (not that it really matters) that the fund upped its stake in MDLZ post-spin. The amended filing also revealed that the fund had accumulated a sizeable new stake in PepsiCo (PEP).

How could these positions just appear months later? In the original 13F filing, the fund noted that some ‘confidential information’ was omitted. I am not an expert on SEC filings (perhaps a reader can offer more insight), but this page on the SEC website notes that managers can request for information to be omitted in a 13F filing (although it still must be submitted to the SEC) for various reasons including risk arbitrage or to protect a proprietary strategy. Just another reminder that while 13Fs are useful datapoints, they are not without significant flaws.

So what is going on here? Lots of theories are being floated about Mr. Peltz’s motives. The WSJ article linked to above postulates that perhaps Mr. Peltz is pushing for a mega-merger between the two companies as Pepsi does have a large snacks business. An alternative could be that he would push Pepsi to execute a snacks spinoff similar to Kraft’s transaction last year which Mr. Peltz pushed for. Hey, why not combine the two and have Pepsi spin off a company and merge that entity with Mondelez? One hopeful outcome of a merger would be the eradication of the awful Mondelez name. Of course there is always the possibility that Mr. Peltz might just like the companies. In the end, these are all just guesses.

Pepsi published a press release on its website acknowledging that it has participated in discussions with the fund over the past few weeks in order ‘to discuss and consider their ideas and initiatives as part of our ongoing evaluation of all opportunities to drive long term growth and shareholder value.’ Good to know that the company is at least sitting at the table with the fund although that is no guarantee that they will listen to his proposals.

While the end game remains to be seen, investors reacted positively to the news as MDLZ surged over 5% and Pepsi was up slightly as well. Interestingly, Market Folly points out that Bill Ackman’s fund Pershing Square also unveiled a Mondelez stake in an amended filing. Sharing ideas?

Needless to say this situation bears close watching and we will update you if any news is released.

Disclosure: Author holds no position in any stock mentioned.