Materials exchange traded funds with heavy exposure to Dow component DuPont (NYSEArca: DD) are trading slightly lower Wednesday after activist investor Nelson Peltz’s Trian Fund Management lost its effort to land four seats on the Delaware-based company’s board.
The Materials Select Sector SPDR (NYSEArca: XLB), the largest materials ETF, is off less than 0.4% at this writing. That is not a bad showing for XLB considering the $2.8 ETFF had a weight of almost 11.3% to DuPont entering trading today and the stock is down more than 6%.
Peltz’s Trian Fund Management LP unveiled a stake in DuPont, now valued at $1.8 billion, in July 2013 at about the same time he first urged PepsiCo (NYSE: PEP) to consider splitting its beverages and snacks businesses. He urged DuPont to separate its agriculture business from its cyclical chemicals operations. [Peltz Pushes for DuPont Breakup]
The Vanguard Materials ETF (NYSEArca: VAW) and the iShares U.S. Basic Materials ETF (NYSEArca: IYM) are down an average of just 0.16% today. The $509 million IYM has a weight of 10.5% to DuPont while the $1.3 billion VAW had an 8% DuPont allocation at the end of the first quarter, according to Vanguard data.
Peltz was nothing if not devoted to winning board seats and potentially forcing a spin-off at DuPont. Trian even created a website for the cause, highlighting, among other DuPont offenses, what Trian deemed to be excessive corporate costs, poor capital allocation, poor corporate governance, bureaucracy and a lack of accountability.