The Faber Report

Trian Buys Big Stake in Family Dollar


Nelson Peltz'sTrian Group has taken a 6.6 percent position in Family Dollar Stores, according to a 13D filed today.

Nelson Peltz

Trian, which has a history of activism, is not following that path in Family Dollar—at least not yet.

While Family Dollar was preparing for a potential fight with Trian, according to people close to the situation, the two seem to be on the same page.

The 13D filing, details discussions between Trian and Family Dollar focused on enhancing value by improving Family Dollars performance in three key metrics:

  1. Increasing sales per square foot.
  2. Improving operating leverage: right now family dollar produces good amounts of free cash flow.
  3. Has no leverage and increasing the number of new store openings.

Family dollar, which is led by Howard Levine, who owns slightly more shares than Trian, has lagged its main competitor in the dollar store space, Dollar General in sales per square foot and new store openings. Family Dollar opened 120 new stores last year, Dollar General opened 500. (Read about Family Dollar's latest earnings report here.)

Trian, which has a history of activism in consumer companies such as Heinz , Cadbury and Kraft, has also been a large shareholder in retailer the other side of the retail world from Family Dollar.

The firm gets a lot of attention for its activism though it's not clear what it's actual performance has been on its various investments.


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