Why Nelson Peltz is right about DuPont

On Thursday night it was announced that Trian Partners launched a proxy fight against DuPont, in order to break up the company and unlock further value.

Trian is the hedge fund run by well-known activist Nelson Peltz. He nominated four candidates to sit on DuPont's board of directors at the annual meeting.

"I think this is the most important proxy fight we've seen in ages…because if history is any guide, Peltz's involvement could ultimately send DuPont's stock much higher, whether or not he actually wins the proxy fight," the "Mad Money" host said.

Trian first became a shareholder of DuPont back in August of 2013, and has put a significant amount of pressure on the company to break up. Though management has made positive impact on the share value, the moves were not strong enough to satisfy Peltz.

So what would satisfy Peltz?

Protective gear made by Dupont on display.
Source: Dupont | Twitter
Protective gear made by Dupont on display.

The activist has proposed that DuPont break itself up into two companies: a growth play that would focus on agriculture, nutrition, health, and industrial bioscience, and a cyclical business to focus on performance materials, safety & protection, electronics and communications.

Peltz stated that he believes this breakup would cause the stock to double within the next three years.

Cramer agrees with this suggested breakup as well. Peltz believes that the complicated and disparate mixture of business structures it is dealing with makes it difficult for management to gain a grasp of how it is really doing. He also added that the complicated structure created a lack of accountability, thus leading to such a complex stock that Wall Street has undervalued it.

In response, DuPont has had some positive initiatives including a $1 billion cost cutting program and a $5 billion buyback for shareholders announced last year.

Cramer interprets Peltz's proxy fight as a good thing, as it shows he is serious about his 24.4 million share position in the company.

"And when Nelson Peltz takes an activist position in a company, he has an incredible track record of causing the stock to go higher," Cramer said.

In fact, the "Mad Money" host believes that Peltz is the only activist that investors should piggy back from. He has a track record of causing positions to outperform the S&P 500.

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Regardless if Peltz wins or loses the fight in DuPont, he still has a great track record. His pressure will still cause DuPont's management to deliver strong results. It's a win-win!

Cramer considers DuPont a buy, regardless of the results.

The fact that the stock was down on Friday, creates a buying opportunity for investors at these levels. So Cramer thinks you should jump on it and snap it up, before Peltz unlocks even more value.

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