Investor Nelson Peltz said he believes his newest targets, asset managers Invesco and Janus Henderson Group, need to grow and to alter their structures to compete against larger rival BlackRock Inc.
Peltz’s Trian Fund Management disclosed three new positions in recent weeks, including 9.9% stakes in both Invesco and Janus. The investment firm also disclosed a stake in Comcast Corp. in September valued at roughly $890 million.
Peltz and Trian co-founder Ed Garden are seeking seats on the board of Atlanta-based Invesco, which Peltz said at a conference Wednesday he hoped would happen soon.
“These are stable businesses that have some challenges, and we think we’re up to the challenge. I think they need scale and I think that’s going to happen,” Peltz said during the Capitalize for Kids Virtual Investors Conference.
“You’re going to see many of these merge, and you’re going to see two or three of them come out similar to what BlackRock looks like,” he added.
Representatives for Invesco and Janus weren’t immediately available for comment.
It was the first time Peltz discussed his investments in Invesco and Janus publicly. He said he liked both businesses because the asset management sector is out of favor despite the strength of the underlying businesses.
They have no environmental risk, they have earnings and cash on the books, and the segments that they operate in are healthy outside of the so-called active equity vertical, where fund managers decide where to invest, he said.
Peltz said he had some ideas on how to restructure the active equity business that he’d share with Invesco once he’s on the board. He didn’t delve into what exactly he would like to see, outside of the companies growing bigger through mergers, cutting costs and potentially some restructuring.
“I love this industry. We’ve been in and out of it for close to 15 years,” he said. “I think I’m more excited about this industry and these investments than I have been about anything for a very long time.”
Asset managers face increasing pressure to consolidate in response to heightened regulatory costs, increased competition from low-cost index funds and shrinking fees. Merging is one way to combat these issues, which led to the 2017 tie-ups that created Janus Henderson and rival Standard Life Aberdeen.
Trian has a track record of taking stakes in companies and agitating for change. The firm’s purchase of a 4.5% stake in Legg Mason Inc. last year — the second time it invested in the firm — resulted in a board seat for Peltz. The company was acquired by rival Franklin Resources Inc. in August.
Comcast has been under pressure as well to improve returns as it tries to withstand the disruption wrought by online services such as Netflix Inc. Comcast’s struggling NBCUniversal and Sky divisions have been a particular drag on its earnings, prompting calls for the company to split off the entertainment business from its cable assets to improve returns. Peltz didn’t discuss his investment in Comcast at the conference.
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