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Nelson Peltz Shares His Investing 'Secret Sauce'

Tuesday, 14 Jul 2009 | 6:04 PM ET

Billionaire investor Nelson Peltz calls it his "secret sauce" to investing.

On the Closing Bell, Peltz told Maria that investors should focus on "key areas" before putting money to work.

Hunting for Opportunity
Whether fast food can bring fast profits, with Nelson Peltz, Trian Partners chairman/CEO.

The traits he loves in companies? Good franchises, strong free cash flow and low leverage.

Peltz says a, “Dollar on the balance sheet is worth a dollar, but a dollar on the income statement is worth $20.”

Right now, Peltz’s Trian Partners has stakes in Cadbury, Dr Pepper, Tiffany, Heinz, Kraft and Wendy's/Arby's. His biggest stake is Wendy’s Arby’s Group.

On the credit markets, Peltz says there is $1.6 trillion in leveraged loans and high-yield bonds between 2004 – 2007 that are in trouble. He expects them to put pressure on lenders as well as the market. Peltz told Maria “good deals will need to be refinanced.” He also expects up to a trillion dollars worth of refinancings alone will happen over the next six years.

Looks like the credit market may not be an ingredient in Peltz’s secret sauce.

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Questions? Comments? Write toinvestoragenda@cnbc.com

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