Rough Patch Continues for Barry Rosenstein’s JANA Partners

JANA Partners LLC is a New York-based hedge fund specializing in event-driven investing founded by well-known activist investor Barry Rosenstein in 2001. JANA Partners usually seeks to identify undervalued companies that have one or more catalysts to unlock value. As Mr. Rosenstein believes “activism has become a tool for greater efficiency and productivity,” his investment firm serves as the instrument for value creation on some occasions by becoming an actively engaged shareholder.

Although activist investors are viewed as aggressive speculators interested in a quick profit rather than the long-term performance of their corporate targets, shareholder activism has become a great tool for driving efficiency in equity markets in recent years. However, JANA Partners LLC is currently experiencing one of its worst performance patches in its entire history. The activist’s main fund recorded negative returns in 12 of the past 19 months through July. JANA Partners, named using the first initials of Mr. Rosenstein’s four children, was down 4.1% this year through the end of July, after having lost 5.4% last year. Last year’s negative return was the firm’s third annual loss since inception. Leaving this discussion aside, this article will discuss several of the activist hedge fund’s major moves completed during the second quarter of 2016.

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JANA Partners Discards Stericycle Inc. (NASDAQ:SRCL) Stake at Profit

JANA Partners sold out its entire stake of 2.42 million shares in Stericycle Inc. (NASDAQ:SRCL) during the second quarter, a stake valued at $306.00 million on March 31. The position accounted for 5.8% of the hedge fund’s overall portfolio at the end of the first quarter. The medical-waste management company has lost 29% of its market value since the beginning of 2016. Stericycle’s stock has suffered two major pullbacks in 2016, one of which having been triggered by the release of the company’s disappointing first-quarter financial results and the subsequent decrease of its 2016 guidance in late April. According to a Fortune article, citing a spokesperson for JANA, the fund sold its stake in the waste management company for a gain in the second quarter before the late April plunge in the value of the company’s stock. Stericycle shares took another hit in late July, after the company said it improperly recognized certain 2015 legal costs and cut its earnings forecast. Richard Driehaus’ Driehaus Capital owns 387,200 shares of Stericycle Inc. (NASDAQ:SRCL) as of June 30.

The next two pages of the article will disclose four other moves completed by JANA Partners LLC during the second quarter.