According to a recent filing with the Securities and Exchange Commission David Kowitz and Sheldon Kasowitz’s Indus Capital has increased its stake in Jamba, Inc. (NASDAQ:JMBA) to about 1.3 million shares from 675,900 shares held earlier by the $6.99 billion alternative investment management firm. The current stake represents about 8.13% of the $253 million restaurant retailer of better-for-you food and beverage offerings.
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Prior to launching Indus Capital in 2000, Kowitz and Kasowitz worked together at Soros Fund Management since 1995. Headquartered in New York, Indus has offices in London, Hong Kong, Tokyo, San Francisco and Stamford. The firm believes that the geographical spread of employees creates a dispassionate approach to investment. The long/short fund aims to deliver high risk-adjusted returns by investing in bull markets while preserving capital in the tough ones. At the end of March, the market value of Indus’ public equity portfolio stood at $507.76 million with the technology sector forming 44% of this value. The top two equity holdings included Alibaba Group Holding Ltd (NYSE:BABA) and Sunedison Inc (NYSE:SUNE).
But why do we track the hedge fund activities? From one point of view we can argue that hedge funds are consistently under performing when it comes to net returns over the last three years, when compared S&P 500. But that doesn’t mean that we completely neglect the hedge fund activities. There are various reasons behind the low hedge fund returns. Our research indicated that hedge funds’ long positions actually beat the market. A small-cap approach, which includes 15 small-cap stock picks of best hedge fund managers, consistently outperformed the S&P 500 since August 2012. These stocks have returned 144% so far since its launch in August 2012, whereas S&P 500 managed to return less than 60% (see the details). This is the primary reason behind our emphasis on the hedge fund activities and sentiments.
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Indus initiated a position in Jamba, Inc. (NASDAQ:JMBA) during the first quarter. The company’s stock is up by 4.64% year-to-date amid first quarter financial results that missed the estimates on both the top and bottom lines. The restructuring efforts at Jamba, Inc. (NASDAQ:JMBA) are in full swing as the company is moving to an asset light model by refranchising its stores. Recently, nine stores in California were refranchised to Blended Star Norcal. By the end of the third fiscal quarter the company is expecting to close another six to seven transactions involving 90-100 stores, with aggregate value amounting to somewhere between $22 million to $25 million. Glenn W. Welling‘s Engaged Capital is the largest stockholder of Jamba, Inc. (NASDAQ:JMBA) within our database with some 1.58 million shares valued at $23.27 million.
With increasing its position in Jamba, Indus has raised the value of the holding to more than $20 million, which is far from the value of its top holdings. The investor’s positions in Alibaba Group Holding Ltd (NYSE:BABA) and Sunedison had a more substantial impact on its returns with Sunedison Inc (NYSE:SUNE)’s stock jumping by 61.4% since the beginning of the year and Alibaba declining by more than 17%.
