n two new filings with the Securities and Exchange Commission, Barry Rosenstein‘s JANA Partners has disclosed reducing its positions in PetSmart, Inc. (NASDAQ:PETM) and SUPERVALU INC. (NYSE:SVU). The fund has sold around 2.08 million shares of PetSmart, cutting its stake to 7.62 million shares, equal to 7.7% of the company’s outstanding common stock. Moreover, the fund cut its exposure to Supervalu by selling close 4.67 million shares in several transactions at an average price of $9.30 per unit. Following the disposal of shares, JANA owns some 25.57 million shares of Supervalu, which represent 9.78% of the company’s common stock.
In a previous filing, JANA Partners announced the withdrawal of its candidates that had been proposed to be elected to the board of directors of PetSmart, Inc. (NASDAQ:PETM). The decisionwas made after the company had agreed to be acquired by a consortium led by BC Partners for $83.00 per share. However, the investor decided to trim its position while the stock was trading at around $81.00 per share. The move came around a week after one of the investors of PetSmart, Inc. (NASDAQ:PETM) had disclosed filing a lawsuit in an effort to stop the takeover. The investor considers that the company was sold at a price too cheap, which alleges that the board reached its fiduciary duties.
Therefore, JANA might be hedging its exposure to the stock in case the lawsuit stalls the acquisition or renounces it altogether, which might send the stock lower, even though the investor that alleges that the deal undervalues PetSmart, Inc. (NASDAQ:PETM) is right.
So far, JANA Partners has been one of the largest shareholders of PetSmart, Inc. (NASDAQ:PETM), while the company represented one of the largest equity positions in its equity portfolio, as the previous round of 13F filings showed. Mr. Rosenstein has initiated a stake in the company in July 2014 and went activist and pursued the board to sell the company. Another shareholder of the company, James A. Star‘s Longview Asset Management also owns some 8.93 million shares of PetSmart and has already expressed its support for JANA’s plan for a sale of the company. Moreover, Longview has disclosed in an earlier filing that it would commit its stake that represents around 8.3% of the company to vote in favor of the transaction. John Paulson‘s Paulson & Co is also among PetSmart’s shareholders, initiating a position that contains 4.17 million shares during the third quarter of 2014.
Now, let’s discuss JANA’s reduction of its position in SUPERVALU INC. (NYSE:SVU). The fund has been holding shares of the $2.51 billion wholesale grocery firm since the first quarter of 2013 and over the last couple of years it has been mainly raising its position from 14.14 million shares it held initially. Meanwhile the stock almost doubled in value. In the last couple of days, Supervalu has been gaining ground on the back of strong financial results for the third quarter of fiscal year 2015. The company posted net sales of $4.20 billion, up from $4.01 billion a year ago, while its earnings per share from continuing operations increased to $0.18 from $0.13 for the third quarter of fiscal 2014.
Therefore, since JANA only slightly trimmed its exposure to SUPERVALU INC. (NYSE:SVU) amid the stock gaining ground on the back of the financial results announcement, it is most likely that the investor has decided to pick some profits. Even following the decrease of its stake, JANA still remains one of the largest shareholders of Supervalu among institutional investors.
Another shareholder of SUPERVALU INC. (NYSE:SVU) is Leon Cooperman’s Omega Advisors. During the third quarter of 2014, Mr. Cooperman cut his fund’s stake in the company by 64% to 2.84 million shares. This is particularly interesting since Mr. Cooperman has pitched the company during the Delivering Alpha Conference in July. Cooperman stated that the stock has a “conservative” price target of $11.00 per share, while sporting a significant potential for value creation and fairly limited risk. Omega raised its stake in SUPERVALU INC. (NYSE:SVU) by 200% during the second quarter of 2014.
Mr. Rosenstein leads an activist fund that has been implicated in several activist situations over the last year, such as the one at Hertz Global Holdings, Inc. (NYSE:HTZ), where the fund owns a 7% stake and proposed a CEO candidate, who, however, has been rejected by the board. Moreover, the fund has appointed three independent directors to the board of Civeo Corp (NYSE:CVEO).
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