Activist Nelson Peltz' Hedge Fund Trian Buys Stake In ‘Undervalued’ Comcast

Trian Fund Management LP, led by billionaire activist investor Nelson Peltz, has acquired a stake in cable giant Comcast Corp. (CMCSA).

Trian said on Monday that it had purchased 7.2 million Comcast shares through June 30, The Wall Street Journal reported. Since then, Trian has increased its total holdings in Comcast to about 20 million shares.

Trian’s holding amounts to a 0.4% stake valued at about $870 million.

“Trian believes Comcast’s stock is undervalued,” Trian said in a statement. “We have recently begun what we believe are constructive discussions with Comcast’s management team and look forward to continuing those discussions.”

Year-to-date, Comcast shares have been about flat, slightly underperforming the S&P 500 index over that period.

The Journal commented that Trian is known for “encouraging changes at companies it targets, such as a breakup or sale of underperforming divisions or moves to improve efficiency and better use capital. It often seeks board representation and tries to avoid public spats, unlike some of its more pugnacious rivals.”

Trian, which manages about $8.8 billion in assets, has a portfolio of companies including such prominent names as Tiffany (TIF), PepsiCo Inc. (PEP), Procter & Gamble (PG) and General Electric (GE).

However, Comcast may be difficult for Trian to influence as Brian Roberts, its chairman and chief executive officer, controls about one-third of the stock’s voting rights.

Comcast’s broadband internet unit has remained a strong business, but its media divisions, including NBCUniversal and the U.K.-based Sky, have suffered from declines in advertisement and other woes.

Comcast had faced criticism for overpaying for Sky to the tune of almost $39 billion two years ago. Comcast had earlier lost a bid to acquire Fox’s entertainment assets – that deal went to Walt Disney Co. (DIS).

Both Sky and NBCUniversal have been hurt by the pandemic.

In July, Craig Moffett, an analyst with MoffettNathanson, said Comcast was "still woefully undervalued.”

"Short of separating the business into two, which we have no reason to expect, we're still not sure what it will take for the valuation gap to close," he wrote. "Comcast is now quintessentially a value stock. And value stocks are out of favor."

However, Moffett touted Comcast’s broadband, pay-TV, and phone subsidiaries.

“The cable business is an infrastructure asset with steady growth and very high free cash flow,” he said.

But he added: “I can’t imagine a shareholder that would disagree that this company would be valued more highly if it were separated into pieces.”