Trian Fund Management’s founder and CEO Nelson Peltz cites Lazard as his top pick of global management and advisory service companies.
“We’re always looking for value at Trian, and we love great brands and great franchises,” Peltz told CNBC’s “Squawk Box” Tuesday. He cites its longevity as one of the most attractive features of the company, calling it a “time-tested brand.”
His comments follow a 6.3 million share purchase by Trian, resulting in Lazard’s stock rising 5 percent. Edward Garden and Peltz, who run Trian, now hold a 5.1 percent share of this management and advisory company.
In a press release earlier this week, Trian Fund Management said it believed that Lazard’s shares, which closed on June 15, 2012, at $23.09 a share “are significantly undervalued and that successful execution of Lazard’s plan could result in the company increasing earnings per share to slightly more than $3.50 in 2014.”
This potential increase to $3.50 would double the value per share of the current price.
Peltz views Lazard as being in the emerging market area, a growth sector. “If you look at the business, 85 percent comes from asset management,” he said. Lazard has $160 billion under management.
“When we look at one firm, we certainly look at the entire horizon of what's out there,” Peltz said, yet other companies, such as Roger Altman’s Evercore and Bob Greenhill’s Greenhill & Co. did not have the history Trian was searching for. “Today, it’s still Lazard,” he said.
Trian notes “Lazard’s attractive low capital-intensive, fee-based business model,” believing that it is positioned well according to long-term financial trends.
Through Lazard has been around for more than 150 years, the company has not always endured financial success. At the beginning of October 2011, its shares were trading at nearly $20, compared to nearly $40 earlier that year.
Trian seeks to “enhance shareholder value” with its 6.3 million shares, and has had several meetings with Lazard’s management to discuss how to do so, the company said in a news release.
Lazard recognizes Trian’s experience and history of successful investments, stating earlier this week: “We appreciate their confidence in Lazard’s franchise and strategy.”
—By CNBC.com’s Theresa McCartney
Additional News: Peltz Discusses Trian’s Lazard Investment
Additional Views: Jim Cramer on Lazard
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Disclosures:
Nelson Peltz owns shares of Lazard.