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NEW YORK (Reuters Breakingviews) - For Nelson Peltz and his big investment in Procter & Gamble, the timing could be as important as the strategy. The pushy investor's Trian disclosed a $3.5 billion position in the Tide-to-Crest conglomerate on Tuesday, but not any proposals. Whatever he has in mind, consumer stocks like P&G are well positioned for a tougher economic environment.
P&G has proven a tough target. Fellow corporate agitator Bill Ackman plowed some $1.8 billion into the company in mid-2012. After helping push out the chief executive to bring back former boss A. G. Lafley, Ackman's Pershing Square exited after just two years without the big return he typically expects from his concentrated investments.
Since Ackman's departure, P&G has made some further progress. Lafley was replaced by David Taylor, a P&G veteran who promised to keep streamlining the enterprise. P&G offloaded Duracell batteries and beauty brands Clairol and Covergirl. Even so, moving the share price at the $230 billion titan has been difficult, opening the door for Peltz.
Breaking up the company may be one option. Although Peltz unsuccessfully pushed such an idea at Pepsi, Bernstein analysts already have sent letters to Taylor and the board encouraging the idea. Gillette could be an area of focus for Peltz. P&G paid more than $50 billion for it in 2005, but the razor operation has come under increasing pressure from startups like Harry's that offer cheaper alternatives by way of subscription services that cater to younger consumers. Unilever recently bought rival Dollar Shave Club, giving it a stronger backer.
Either way, P&G at least offers some downside protection for Peltz. Consumer staples are often resilient when the economy starts to crack. P&G boasts one of the most consistent dividend track records in U.S. corporate annals, an especially prized feature when stock prices stagnate.
The United States is already at near full employment and the stretch of growth since 2009 is one of the longest in the country's history. That suggests another recession may not be far off. Odds are that Peltz has something bigger in mind, but he picked a good time to try scrubbing up P&G.