Barry Rosenstein founded Jana Partners in 2001, and now has some $3.5 billion in assets under management. The hedge fund focuses on value-oriented and event-driven strategies. A couple of Jana’s latest activist campaigns include its fight with Ashland Inc. (NYSE:ASH) and Agrium Inc. (USA) (NYSE:AGU). Outlined below are a few of Jana’s notable sell-offs and additions during the first quarter, per the fund’s quarterly filing with the SEC (check out Jana’s latest moves).
A few of Jana’s latest moves include notable sell-offs. The hedge fund dumped its entire stake of American International Group Inc (NYSE:AIG), Tripadvisor Inc (NASDAQ:TRIP) and Netflix, Inc. (NASDAQ:NFLX).
Insurance out of favor
AIG will also be limited over the interim related to difficulties with returning capital to shareholders given its designation as a Systematically Important Financial Institution. The overall hedge fund sentiment for American International Group Inc (NYSE:AIG) was negative during the first quarter. At the end of the first quarter, there were a total of 146 hedge funds long the stock, a 5% decline from the end of 2012 (see which stocks still love AIG).
Not far to travel
Tripadvisor Inc (NASDAQ:TRIP) is expected to see revenue up 22% in 2013 and then another 19% in 2014. A few key initiatives expected to drive this growth are international expansion and mobile platform development. The travel review site saw a 54% increase in the number of unique monthly users during 1Q 2013 on a year-over-year basis.
However, despite all the good news, Tripadvisor Inc (NASDAQ:TRIP)’s valuation might be too rich, not to mention the fact that 27% of the company’s revenue came from Expedia Inc (NASDAQ:EXPE), which spun off TripAdvisor in 2011.
The competition in the space remains robust from both larger Internet companies and smaller start-ups. What’s more is that Tripadvisor Inc (NASDAQ:TRIP) appears to be a bit expensive, trading at 9.6 times sales, compared to Priceline.com Inc (NASDAQ:PCLN)‘s 7.7 times, Expedia Inc (NASDAQ:EXPE) 1.9 times and Orbitz Worldwide, Inc. (NYSE:OWW) 1.0 times.
Netflix, Inc. (NASDAQ:NFLX) has continued overhang from valuation concerns. The streaming-content company has an EV/EBITDA of 100, whereas the other “expensive” stock Amazon.com, Inc. (NASDAQ:AMZN) is 43.5. What’s more is that Netflix trades at a P/E of 550 times, which is at the upper end of its five-year P/E range of 15 times to 570 times.
The stock saw a nice uptick, moving up 25% over the last three months, on better-than-expected 1Q results. However, the second-quarter outlook is tempered; yet, investors overlooked this and took the 1Q results as a sign that worldwide streaming-subscriber growth would continue upward.
One of the big headwinds for Netflix, Inc. (NASDAQ:NFLX) is the competition. The barriers to entry are low and consumers can maintain multiple subscriptions, with switching costs being non-existent. Let’s run through some of the notable competitors:
Multi-channel video program distributions with TV everywhere applications: HBO GO, Showtime Anytime
Video-on-demand content and cable providers: Time Warner Cable Inc (NYSE:TWC), Comcast Corporation (NASDAQ:CMCSA), DIRECTV (NASDAQ:DTV), DISH Network Corp. (NASDAQ:DISH), AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ).
DVD rental and kiosks: Blockbuster and Redbox
Video retailers: Best Buy Co., Inc. (NYSE:BBY), Wal-Mart Stores, Inc. (NYSE:WMT) and Amazon
Although Jana was dumping Netflix, Inc. (NASDAQ:NFLX), billionaire and Tiger cub, John Griffin of Blue Ridge Capital added Netflix to his portfolio during 1Q (check out Griffin’s other moves).
