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2 Top Food Stock Picks from Nelson Peltz

Nelson Peltz

Nelson Peltz’s Trian Fund has a huge stake in Mondelez (MDLZ) and a owns a significant number of shares in PepsiCo (PEP). Peltz, known to be an activist investor, has suggested dramatic changes at the companies, although two of his proposals have yet to be carried out. In January, Peltz became a member of the board of Mondelez and said it would create value if bought by PepsiCo. Neither company was excited about this proposed merger, and it wasn’t pursued. He also suggested a name change for Mondelez, which was spun off by Kraft in 2012, but that idea was also shelved. In addition, Peltz wanted to see PepsiCo spin off its snacks division, but CEO Inra Nooyi said, “These two categories are better together. Not just in the United States, but around the world.”

It is not inconceivable that Mondelez might get a takeover bid. Jim Cramer thought the company could be a good takeover for Coke to diversify beyond carbonated beverages, which are waning in popularity. If Mondelez does get bought, Trian Fund will be a major beneficiary, since Mondelez comprises 23% of the portfolio. Peltz purchased, 3, 861 additional shares in the second quarter, for a total of 41.47 million shares worth $1.86 billion.

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Peltz owns 12.93 million shares of Pepsico worth $1.15 billion. The company is performing much better than its competitor Coke, and posted organic revenue growth of 3.6%, currency-adjusted EPS growth of 9% and raised its 2014 EPS guidance increase from 7% to 8%.

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