Barry Rosenstein‘s JANA Partners recently filed its latest Form 13F with the U.S. Securities and Exchange Commission for the reporting period of June 30. According to the filing, JANA Partners’ public equity portfolio held securities totaling about $16.8 billion at the end of the second quarter. New York-based JANA Partners is an event-driven hedge fund co-founded in 2001 by billionaire Mr. Rosenstein, who is a highly-qualified activist investor. JANA Partners primarily focuses on the public stock markets in the United States, employing different strategies such as an activist strategy, market-neutral strategy, and risk arbitrage strategy, among others. During the second quarter, JANA Partners acquired stakes in more than 12 new companies. In this article, we’ll focus on the fund’s top three of those new picks, which are ConAgra Foods Inc (NYSE:CAG), Johnson Controls Inc (NYSE:JCI), and Time Warner Cable Inc (NYSE:TWC).
We pay attention to hedge funds’ moves because our research has shown that hedge funds are extremely talented at picking stocks on the long side of their portfolios. It is true that hedge fund investors have been underperforming the market in recent years. However, this was mainly because hedge funds’ short stock picks lost a ton of money during the bull market that started in March 2009. Hedge fund investors also paid an arm and a leg for the services that they received. We have been tracking the performance of hedge funds’ 15 most popular stock picks in real time since the end of August 2012. These stocks have returned 123% since then and outperformed the S&P 500 Index by around 65 percentage points (see the details here). That’s why we believe it is important to pay attention to hedge fund sentiment; we also don’t like paying huge fees.
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First, we’ll talk about ConAgra Foods Inc (NYSE:CAG), a $19.3-billion market cap packaged food company, based in New York. JANA Partners, in its latest 13F, disclosed holding 30.57 million ConAgra Foods Inc (NYSE:CAG) shares (including options to purchase 19.03 million shares), with the stake valued at around $504.4 million. The new position is not a new revelation, as ConAgra Foods Inc (NYSE:CAG) announced last month that it had entered into an agreement with JANA Partners to appoint Bradley A. Alford and Timothy R. McLevish to the company’s board of directors, bringing the board’s size to 14 members from 12. ConAgra Foods Inc (NYSE:CAG) was able to improve its financial situation in the fiscal fourth quarter ended May 31. The company reported earnings per share (EPS) of $0.47 for the quarter, versus a loss per share of $0.95 in the same quarter prior year. The company also repaid about $1.1 billion of debt in fiscal 2015. The company’s stock has been achieving strong results, increasing by 22.79% year-to-date. Among the investors we track is Matthew Hulsizer’s Peak6 Capital Management, which held 81,783 shares of ConAgra Foods Inc (NYSE:CAG) as of June 30.
Next up is Johnson Controls Inc (NYSE:JCI), in which JANA Partners reported ownership of 10.04 million shares, valued at $497.06 million. Johnson Controls Inc (NYSE:JCI) is a global technology and industrial company, with a market cap of about $29.6 billion. The company posted net income of $178 million for the third quarter of fiscal 2015, versus $176 million in the same period last year. Revenues for the quarter fell to $9.6 billion, from $9.8 billion in the year-ago quarter. Johnson Controls Inc (NYSE:JCI)’s shares have lost 6.14% year-to-date. In its latest 13F, Mario Gabelli’s GAMCO Investors revealed owning 723,036 shares of the company as of June 30.
On the third position is Time Warner Cable Inc (NYSE:TWC), in which JANA Partners disclosed a $419.4 million stake, containing 2.35 million shares. Time Warner Cable Inc (NYSE:TWC) is a $52.7-billion market cap provider of video, high-speed data, and voice services in the United States. For the second quarter, Time Warner Cable Inc (NYSE:TWC) reported net income of $463 million, or $1.62 per share, versus $499 million, or $1.77 per share, in the same quarter of 2014. Shares of Time Warner Cable Inc (NYSE:TWC) have increased by 20.03% year-to-date. In its latest 13F, Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, reported holding 607,201 shares of the company at the end of the second quarter.
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