Nelson Peltz is once again upping the pressure on embattled Club name Disney (DIS) — a positive development given the company’s poor performance since the return of CEO Bob Iger. Peltz’s Trian Fund Management increased its stake in Disney to more than 30 million shares, worth about $2.5 billion, CNBC reported Monday . That’s up from roughly 6.4 million shares at the end of the second quarter and makes the activist firm one of the largest shareholders in the entertainment giant. The firm is also planning to push for multiple board seats at Disney, including a spot for Peltz. This would be Round 2 of Peltz vs. Disney. In January, Peltz waged a proxy battle to gain a seat on Disney’s board of directors with the aim of improving the company’s operational and financial performance. In February, Peltz declared the proxy battle was over after Iger laid out his plan to cut costs, lay off workers, and reorganize the company. Disney shares were up 1.7% on the news Monday afternoon, to $84 apiece. We don’t know exactly what Peltz plans to push for this time around. In the previous battle, Peltz was critical of Disney’s $71 billion acquisition of Fox in 2019. He also said weak corporate governance over the years had eroded the value of the company. Disney’s stock performance has been “lousy” Jim Cramer said Monday, falling 15% since Iger’s return back to the helm in November 2022. “Peltz is just shocked at the decline in market value [or about $70 billion],” Jim said. “There’s a belief that the company reflects the value of the theme parks and not much else.” If Disney rejects Trian’s proposal, the activist firm can nominate its directors during the next nomination window, which runs from Dec. 5 through Jan. 4. Those nominees would be voted on at the company’s annual meeting in the spring of 2024. DIS 1Y mountain Disney’s 1-year stock performance. Disney reappointed Iger as CEO after a tumultuous 11 months under his handpicked successor Bob Chapek. Iger was CEO for the 15 years prior to Chapek’s hiring. Industry headwinds have mounted since Iger’s return. A writer’s strike, a struggling box office, and slower theme park attendance have all led weaker financial performance than we’ve come to expect. Patience is running thin, but there is evidence that Iger’s turnaround plan is working. The company expects its cost-cutting efforts will improve margins and still promises streaming profitability by the end of fiscal 2024. Elsewhere, Iger said he’s exploring strategic options for its struggling linear TV unit, including selling it. In addition, he’s been seeking partnerships that would allow Disney to help fund ESPN amid rising sports rights costs but keep control of the sports network. Last month, Disney announced it plans to invest billions in its theme parks business. While this investment comes at a time where the company is facing a lot of pressure it can be seen as a sign of strength in a business segment which has been a profit engine for the company. Bottom line As Disney shareholders, we’ve been displeased by the slow progress the company has made on its turnaround initiatives and believe bringing in a cost-conscious investor like Peltz could keep the company on its path to restoring its profitability. Now that Peltz’s firm, Trian Partners has accumulated a vast stake in Disney and Iger’s changes haven’t moved the needle, Peltz could have the upper hand in arguing for a seat (or more) on the company’s board. We are expecting a lackluster fiscal fourth quarter from Disney as Iger continues to iron out the multiple wrinkles he’s facing. Disney is in a tough position given the erosion of the linear TV industry while losing money on streaming, with ongoing Hulu negotiations and the untapped potential of ESPN also weighing on the company. But a strengthened turnaround plan and actions on its numerous strategic reviews could set Disney up for a better 2024. (Jim Cramer’s Charitable Trust is long DIS . See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Nelson Peltz, founder and chief executive officer of Trian Fund Management, during the Future Investment Initiative (FII) Institute Priority Summit in Miami, Florida, on Thursday, March 30, 2023.
Marco Bello | Bloomberg | Getty Images
Nelson Peltz is once again upping the pressure on embattled Club name Disney (DIS) — a positive development given the company’s poor performance since the return of CEO Bob Iger.
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