Let’s Talk About Nelson Peltz
I have written about Nelson Peltz before. I have already stated my disdain for activist investors, but I did not do a great job stating why this is a particularly bad situation for an activist investor.
Nelson Peltz and his firm, Trian Fund Management, own $2.5 billion of Disney stock. He bought into the company in 2022 when Bob Chapek was running the show and started complaining internally. Then, Iger took over again in 2023 and started making spending cuts. Peltz had something in him that needed to take credit, so he went public with his demands and took credit for what Bob Iger was already doing. Everybody forgot about him, but he returned in late 2023 with Ike Perlmutter, the former CEO of Marvel. They were both proclaiming that Disney had lost its way and that more cuts would need to be made. Ironically, Ike Perlmutter (who really sucks) was laid off in spending cuts. Instead of recognizing that he was laid off because of frugality, he believes Disney laid him off to get rid of someone they had always hated. Ike is a moron who believes he is smart: which is the most dangerous type of moron. Unfortunately, he has some shares and a smidgen of influence at Disney. Anyways, Ike and Nelly joined together and are pushing for massive cuts in spending and board seats for Nelson and his buddies.
Activist investors are generally unhealthy for a company's future if you trust the leadership. An activist investor at Tesla would not be unhealthy; the same is true for activist investors at Paramount or Zoom. If you do not believe in the leadership, a trusted, experienced activist investor would not be unhealthy. However, Bob Iger is literally the best man on the planet to lead Disney. He has decades of experience and an accurate view of the industry and discipline. Bob Iger is already repositioning Disney. Iger sold the ESPN name to a betting company, Penn, for a couple of billion dollars. Disney does not have to pay any money for management of the betting company; they are renting the ESPN name out for $2 billion and are testing the waters in an industry growing exponentially. Bob Iger bought out the rest of Hulu, preparing Disney to roll their streaming services together. Bob Iger raised prices at theme parks, which does not seem to have affected attendance. Bob Iger has also cut spending by SIX BILLION DOLLARS. Bob Iger is better than any other human being on the planet at running this company. Nelson Peltz is a bored country club merchant, an 81-year-old man who wants to start something. Nelson Peltz is merely a gnat in the teeth of this historic company.
Fortunately, Nelly (not the singer) will not receive board seats. Without board seats, all Nelson can do is scream from the sidelines. Bob Iger and the Disney leadership team have made some partnerships with other activist investors who share my point of view on Nelson. If this was six or eight months ago, I could see this being more of a battle, but frankly, I feel more optimism around Disney right now. Bob Iger and Disney will be fine, and Nelson Peltz will soon realize that he is an old billionaire in Miami living in a gigantic mansion with a golf course. Soon, he will have to film real-life Succession as he passes his fund on to his TEN children. Frankly, he will lose interest and will be exiled back into his money.
“They were careless people, Tom and Daisy – they smashed up things and creatures and then retreated back into their money or their vast carelessness, or whatever it was that kept them together, and let other people clean up the mess they had made.”
