Activist investor Nelson Peltz, who took a stake in State Street Corp. more than two years ago to push for changes to boost the share price, exited his holding in the custody bank in the third quarter.
Peltz’s Trian Fund Management LP divested 1.86 million shares of Boston-based State Street, with a market value of $121.5 million as June 30, according to a regulatory filing yesterday with the U.S. Securities and Exchange Commission.
State Street shares have more than doubled since Trian made a public statement on Oct. 16, 2011, admonishing State Street’s board of directors for poor performance and suggesting steps to increase share prices. Peltz, along with Trian executives Peter May and Ed Garden, urged the company to adopt a multistep plan for raising profit that included a possible sell-off of the custody bank’s money-management unit, prioritizing shareholder returns over acquisitions and a commitment to cost-cutting.
Chief Executive Officer Joseph Hooley cut costs and returned capital to shareholders more aggressively than rivals such as Bank of New York Mellon Corp. over the past three years. State Street’s third-quarter profit climbed 14 percent as the global stock-market rally helped boost assets and the company benefited from reduced costs.
The efforts paid off as State Street shares have beaten peers this year, climbing 50 percent through yesterday, compared with 29 percent for Bank of New York Mellon Corp., and 14 percent for Northern Trust Corp. State Street shares closed at $70.62 yesterday, up 108 percent from Oct. 14, 2011, the last trading day before Peltz’s letter was made public.
Custody banks such as State Street keep records, track performance and lend securities for institutional investors including mutual funds, pension funds and hedge funds. State Street also manages investments for individuals and institutions.
Trian successfully pushed Ingersoll-Rand Plc to spin off units last year. Peltz also is pressuring PepsiCo Inc., the snack-food maker and soda producer, to acquire competitor Mondelez International Inc., formerly known as Kraft Foods Inc., or separate its snacks and beverages businesses.
Trian also sold its stake in Sotheby’s in the third quarter. The firm sold 2.07 million shares of the New York-based auction house valued at $78.6 million as of June 30. Sotheby’s had its debt put on review for a possible downgrade by Standard & Poor’s in September after the company said it’s reassessing its capital allocation and financial policies.
Anne Tarbell, a managing director at Trian, declined to comment on the stakes, as did Carolyn Cichon, a spokeswoman for State Street.