Pershing Square Sells Entire Stake In Nomad Foods Limited (NOMD)

Pershing Square closed its position in Nomad Foods Limited (NYSE:NOMD) during the third quarter. Nomad Foods is a British Virgin Islands-based packaged foods company that moved its listing from the London Stock Exchange to the New York Stock Exchange in January 2016. The company’s share price has significantly increased over the last 12 months. In its Q3 investor letter, Pershing Square discussed Nomad Foods, noting that it sold its entire stake in the packaged foods company in September for $14.16 per share – NOMD closed at $16.76 on Tuesday. Let’s take a look what Pershing Square said about Nomad Foods in the letter.

We invested in Nomad in the second quarter of 2015 and a member of our investment team, Brian Welch, joined the board. Our investment was made in conjunction with the company’s formation and its acquisition of Iglo, a leading European branded frozen food company with a strong position in the UK, Italy, and Germany. Stefan Descheemaeker was hired as CEO to lead the new company.

Nomad followed its initial transaction with the highly synergistic and complementary purchase of Findus’s non-UK assets in August 2015. The Findus acquisition helped to fill out Nomad’s geographic footprint with leading positions in the Nordic countries and France, and together with Iglo, created the leading branded frozen food business in Western Europe.

The combination of Iglo and the Findus assets provided a strong foundation for Nomad as a newly formed public company. That said, the company’s first several quarters were disappointing as the strategy under the prior Iglo management team had focused too much on new frozen food categories at the expense of its core offerings. That strategy drove weak topline trends shortly after Nomad’s acquisition of Iglo was completed.

The new team, led by Stefan Descheemaeker, and under the oversight of the board, did a superb job shifting its strategy to focus on core offerings or “Must Win Battles.” This strategy shift drove sequential improvements in sales trends for seven straight quarters. In 2017, the company achieved organic sales growth of 1.1% in Q1 and 3.5% in Q2; full-year guidance calls for positive low-single-digit growth. As a result of this resumption of growth, Nomad’s shares increased by 49% from the beginning of this year to our exit.

We sold our entire Nomad investment in September for $14.16 per share, an increase of 35% from our average cost in just over two years.