Barnes & Noble Shares Climb 18% After Jana Partners Buy In

Barnes & Noble’s (BKS) share prices gained more than 18% last Monday after hedge fund Jana Partners bought a 12% stake in the company.

Barry Rosenstein JANA PARTNERS

Jana Partners LLC, managed by Barry Rosenstein, disclosed late Friday that it bought almost seven million shares of Barnes & Noble, plus an option to buy an additional 250,000 shares at $13. Barnes & Noble’s stock price had been languishing in the $10 to $20 range for the past year, and closed at $13.03 in yesterday’s trading.

Jana Partners’ Barry Rosenstein believes in betting on the management teams of the companies he buys. He was also likes to invest in companies with strong cash flows. This philosophy seems to be working because as of October 2011, Jana Partners returned an amazing 200% since it started operations

Jana’s recent buy-in may seem promising for Barnes & Noble, which (by the way) incurred losses of more than $73 million last year. In contrast, its rival Amazon.com (AMZN), made a $631 million profit during the same period. Both companies sell books, e-books, e-readers, and other merchandise online, but Amazon.com trumps Barnes & Noble in terms of revenue, brands, and maybe even strategy. The New York Times reported that “the company (Barnes & Noble) has said it is turning itself around, in particular by investing heavily in its Nook e-book division, though the plan remains risky”. Although the company reported record sales for its nook e-reader, it is still unclear if they will be able to turn that into a profit. It is also unclear if the company will follow Amazon.com’s profitable strategy of selling content via streaming from the cloud.

So does this mean that Barnes & Noble is a buy? I would say not yet. Let Jana do what it plans to do with BKS and wait for the company to turn a profit. As of now, Jana’s plans as an investor in Barnes & Noble remain unclear, so I wouldn’t take a position in BKS right now. For all we know, Jana could lobby the shareholders to spin-off divisions just like what it did with Mcgraw Hill (MHP) last year. News of Barnes & Noble’s potential Nook spinoff is already out, and this could be a potential play for Jana. However, I must caution investors that these are all still just speculations.

On the other hand, investors that are really craving for a piece of Jana’s play in BKS can use a safer approach to speculation, and that is to buy long-term call options on BKS. These contracts are relatively “cheap” and and can be held for two to three years going forward, which is probably enough time for BKS to make a turnaround.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

Top 6 Cities For The Ultra Rich to Live in Comfort

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!