Billionaire Rosenstein Ditches Expedia (EXPE) for Rival Priceline (PCLN), Adds Twitter (TWTR), Unloads Microsoft (MSFT)

Activist investor Barry Rosenstein’s Jana Partners is a hedge fund with long and short exposure to the equity markets. The investment firm follows event-driven investment strategy. It was formed in 2001 and uses fundamental analysis for picking undervalued stocks. In a few cases, the firm has taken activist stance as well. Rosenstein sold 20% of the fund to Neuberger Berman in 2015, valuing the fund at $2 billion. Jana Partners’ performance after the sale isn’t very encouraging. The fund lost 5.4% in 2015 and was down 4.1% during the first 7 months of this year. Fortunately, the fund managed to claw back from this hole and went into black in November as it returned 2.2% on the heels of Trump’s election victory. Jana Partners is up 1.4% for the year.

Consumer Staples stocks form the biggest chunk of its holdings. Information Technology stocks also account for nearly one-fifth of its portfolio. During the September quarter, the fund initiated positions in Priceline Group Inc (NASDAQ:PCLN) and Twitter Inc (NYSE:TWTR) while liquidating its positions in Expedia Inc (NASDAQ:EXPE), Microsoft Corporation (NASDAQ:MSFT) and Walgreens Boots Alliance Inc (NASDAQ:WBA).

The smart money sentiment is an important metric that can be used to assess the long-term profitability of a stock. While there are thousands of stocks trading daily on the market, taking a look at what hedge funds think about certain companies can narrow down the search significantly. At Insider Monkey, we track more than 700 hedge funds, whose 13F filings we analyze as part of our small-cap strategy. Our research has shown that imitating a portfolio that includes the 15 most popular small-cap stocks among hedge funds can outperform the market by as much as 95 basis points per month on average (see more details here).

Priceline Group Inc (NASDAQ:PCLN) stock gained 17% this year so far. The stock accounted for 2.72% of Jana’s portfolio. For the quarter ended on 30th September, 2016, the investment fund initiated its position in the stock by buying 105,409 shares. The fund’s holding amounted to $155 million. Of the hedge funds in our database, 98 funds currently hold $8.2 billion worth of Priceline Group shares in their portfolio at the end of the September quarter, which equals to 11.30% of the outstanding shares. Priceline reported strong results for its third quarter. The company’s earnings for the quarter stood at $30.94 per share, surpassing consensus estimate of $28.40 per share. Its revenue was reported at $3.6 billion, matching forecast of $3.617 billion.

Twitter Inc (NYSE:TWTR) stock declined 21% in this year so far. However, Jana Partners initiated its holding of the stock during the quarter ended on 30th September, 2016. The fund held $67 million worth of Twitter stock at the end of the quarter, forming 1.19% of its portfolio. Jana Partners had 2.94 million shares of the company in its portfolio at the end of the period. Among the funds we track, 47 funds held $1 billion worth of Twitter’s stock in aggregate at the end of September, having amassed 6.6% of its outstanding stock betting on the possibility that the tech company will be sold at a premium. The beleaguered company recently announced the closure of its popular video app Vine. The company is reportedly looking to sell the app. It is likely that the Twitter may receive less than what it paid for Vine nearly four years back. India is included in the top 10 biggest markets for Twitter. To know more about social networking sites in India, read our article here.

Expedia Inc (NASDAQ:EXPE) stock formed 3.76% of Jana Partners’s portfolio at the end of June. The fund held 2 million shares of the company which were liquidated before the end of September quarter. The number of funds from our hedge fund database long Expedia was at 62 in the quarter ending September. The total value of their holdings stood at $4.8 billion, in comparison to $3.9 billion held by 67 funds at the end of previous quarter. The company announced that its hotel search platform is set to make its IPO debut. It has filed with the US regulators for $400 million worth of Initial Public offering. The stock will be listed on the NASDAQ under the ticker ‘TRVG.’

Microsoft Corporation (NASDAQ:MSFT) stock gained 8% this year so far. The company also offers dividend yield of 2.6%. Jana Partners liquidated its holding of the stock during the September quarter to nil. The fund had held 6.8 million shares of Microsoft which formed 6.03% of Jana Partners’ portfolio. 126 hedge funds from our database have positions in Microsoft, with total holdings of about $18 billion at the end of September quarter, amounting to about 4.0% of the company’s outstanding stock. Microsoft reported that it will start offering its Visual Studio program for the Mac platform. The move will help the company in boosting its market share. The new announcement also marks Microsoft’s transition towards cloud based business.

Walgreens Boots Alliance Inc (NASDAQ:WBA) stock declined 0.5% this year as it also saw Jana Partners liquidating its holding of the stock. The investment firm held 4.57 million shares of Walgreens Boots Alliance during the September quarter. 67 hedge funds we track hold about $4.43 billion of Walgreens Boots Alliance stock as on the end of June quarter, in comparison to 72 funds holding stock worth $5.28 billion the previous quarter. This number further declined to 60 at the end of September. The company is currently looking to dispose of 650 stores, in order to receive the Federal Trade Commission’s approval for its Rite Aid acquisition. Additionally, the company also filed $140 million suit against Theranos for breach of contract.

DISCLOSURE – NON