Nelson Peltz is selling but the Unilever share price is up! What’s going on?

The Unilever share price has risen despite one of the company’s largest shareholders selling part of his stake for £181m. Could now be a good time to buy?

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: Unilever plc

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Since 9 August, the Unilever (LSE:ULVR) share price has increased by 4% (at 30 August).

This is despite Trian Fund Management, the investment firm found by activist investor Nelson Peltz, offloading 3.82m shares in the company at a weighted average price of £47.33.

Peltz is also a director of Unilever.

Should you invest £1,000 in Novocure right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Novocure made the list?

See the 6 stocks

The sale yielded £181m. But the fact that such a prominent figure has decided to reduce his holding doesn’t seem to have deterred others from buying.

Date of saleNumber of shares soldAverage price (£)Sales proceeds (£)
9 August2,931,12747.38138,876,797
12 August738,47147.1934,848,446
13 August155,00047.117,302,050
Totals3,824,59847.33181,027,293
Source: company announcement

The announcement to the stock exchange didn’t provide any clues as to the reasons behind the sale. It vaguely refers to “portfolio management” as the primary motivation.

But as the saying goes, one person’s trash is another’s treasure. The company’s share price has been pushed higher as investors — not being put off by the sale — want a piece of the consumer goods giant.

A former shareholder

I used to have a stake in Unilever. But I got frustrated as the share price seemed unable to break through the £43-barrier.

Since then it’s risen by around 14%. Despite this, I don’t regret selling — I’ve done better elsewhere. 

Created with Highcharts 11.4.3Unilever PriceZoom1M3M6MYTD1Y5Y10YALL2 Sep 20193 Apr 2025Zoom ▾Jan '20Jul '20Jan '21Jul '21Jan '22Jul '22Jan '23Jul '23Jan '24Jul '24Jan '25202020202021202120222022202320232024202420252025www.fool.co.uk

However, Unilever is a quality company with an impressive portfolio of household brands. It consistently generates €10bn-€11bn of cash from its operating activities.

Source: Unilever website

Its results for the first six months of 2024 revealed sales growth, both in terms of price and volume. And its operating margin improved.

This success is attributed to focussing on the company’s top 30 brands, which account for approximately 75% of turnover.

The group’s continuing strong performance casts doubt on the idea that consumers are becoming increasingly price sensitive and swapping better-known names for cheaper alternatives.

But surely there’s got to come a point when it’s no longer possible to raise prices without damaging earnings?

I can’t believe how expensive some of Unilever’s products have become, especially when compared to many supermarket own-brands. Personally, I think we might be close to ‘peak prices’ for many of its products.

Too pricey

Similarly, I think the company’s shares are expensive.

Analysts are expecting underlying earnings per share of €2.76 (£2.33) for the year ending 31 December 2024. This implies a forward price-to-earnings ratio of around 21. This is on the high side, even for a member of the FTSE 100.

And it’s slightly above its five-year average.

Nor does the stock appear to offer good value when compared to that of, for example, Reckit Benckiser, which trades on a forward multiple of 13.7.

Underwhelming returns

Unilever’s dividend is also disappointing.

In 2023, the company paid 148.45p a share. If repeated this year, it implies a current yield of 3%. For an income investor like me, that’s not enough, especially from a company that’s something of a cash machine.

When I first bought the stock, it was yielding close to the Footsie average of 3.8%. For further comparison, Reckit Benckiser’s stock is currently offering a return of 4.4%.

It’s for these reasons — doubts over its ability to raise prices further, a toppy valuation, and a miserly dividend — that I don’t want to invest.

5 Shares for the Future of Energy

Investors who don’t own energy shares need to see this now.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — sees 2 key reasons why energy is set to soar.

While sanctions slam Russian supplies, nations are also racing to achieve net zero emissions, he says. Mark believes 5 companies in particular are poised for spectacular profits.

Open this new report5 Shares for the Future of Energy — and discover:

  • Britain’s Energy Fort Knox, now controlling 30% of UK energy storage
  • How to potentially get paid by the weather
  • Electric Vehicles’ secret backdoor opportunity
  • One dead simple stock for the new nuclear boom

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

James Beard has no position in any of the shares mentioned. The Motley Fool UK has recommended Reckitt Benckiser Group Plc and Unilever. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

At a 52-week low but forecast to rise 73%! Is this growth share the FTSE’s top recovery play? 

This FTSE 100 growth share has taken an absolute beating over the past two years but Harvey Jones says the…

Read more »

Investing Articles

This FTSE 250 share offers a juicy 9.8% yield. Will it last?

This well-known FTSE 250 share has a percentage dividend yield approaching double digits. Should Christopher Ruane add the income share…

Read more »

Investing Articles

Is a £333,000 portfolio enough to retire and live off passive income?

A third of a million pounds can generate a serious amount of passive income, but relying on this sum alone…

Read more »

The flag of the United States of America flying in front of the Capitol building
Investing For Beginners

Why FTSE 100 investors should pay attention to ‘Liberation Day’

Jon Smith explains why the upcoming tariff announcement from across the pond could have an impact on the FTSE 100,…

Read more »

Concept of two young professional men looking at a screen in a technological data centre
Investing Articles

Here’s why Nvidia stock fell 13% in March

The Nvidia stock price rise was looking unstoppable. Should investors now be wondering if the same might be true of…

Read more »

US Stock

It’s ISA deadline week! Here’s my 3-step game plan

Jon Smith tries to calm the hype around the last minute ISA rush to buy stocks and explains why he's…

Read more »

Snowing on Jubilee Gardens in London at dusk
Investing Articles

£10,000 invested in BAE Systems shares at Christmas is now worth…

BAE Systems shares have been surging in the FTSE 100 in 2025, driven higher by the wavering US commitment to…

Read more »

Investing Articles

Up 19% in 2 weeks, can the Tesla share price rebound further?

Tesla's first-quarter delivery numbers came out today. Will they help persuade our writer to invest his money at the current…

Read more »