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Here’s How Billionaire Activist Barry Rosenstein Positioned His Portfolio For Q4

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In its most recent 13F, billionaire Barry Rosenstein’s JANA Partners has disclosed a U.S equity portfolio worth $8.9 billion as of the reporting period of September 30. New York-based JANA Partners is an event-driven hedge fund co-founded in 2001 by Mr. Rosenstein, who is a highly-qualified activist investor. The fund primarily focuses on the public stock markets in the United States, employing different strategies such as an activist strategy, market-neutral strategy, and risk arbitrage strategy, among others. During the third quarter, JANA Partners initiated new positions in 16 companies, while selling off its holdings in 26 stocks. In this article, we will analyze JANA Partners’ top five holdings, in terms of value, as of September 30.

Barry Rosenstein - Jana Partners

Most investors don’t understand hedge funds and indicators that are based on hedge funds’ activities. They ignore hedge funds because of their recent poor performance in the bull market. Our research indicates that hedge funds underperformed because they aren’t 100% long. Hedge fund fees are also very large compared to the returns generated and they reduce the net returns experienced by investors. We uncovered that hedge funds’ long positions actually outperformed the market. For instance the 15 most popular small-cap stocks among funds beat the S&P 500 Index by more than 53 percentage points since the end of August 2012. These stocks returned a cumulative of 102% vs. a 48.7% gain for the S&P 500 Index (see more details here). That’s why we believe investors should pay attention to what hedge funds are buying (rather than what their net returns are).

Barry Rosenstein
Barry Rosenstein
JANA Partners

#5 Allergan PLC (NYSE:AGN)

– Shares held (as of September 30): 1.89 million

– Total Value (as of September 30): $512.89 million

JANA Partners’ fifth-ranked holding is represented by Allergan PLC (NYSE:AGN), in which the fund increased its position during the quarter by 268,546 shares. Having a market cap of over $117 billion, Allergan PLC is a global pharmaceutical company focused on eye care, neurosciences, medical dermatology, medical aesthetics, breast enhancement, obesity intervention, and urologics. Bloomberg reported that billionaire investor Dan Loeb, the founder of activist hedge fund Third Point, recently proposed that Allergan PLC and biotechnology company Amgen Inc. (NASDAQ:AMGN) should consider a merger. Loeb believes that such a deal between the two companies would create multiple avenues for growth, Bloomberg reported, citing unnamed sources who did not want to be identified. Amgen is the second-largest equity holding of Third Point as of the end of the third quarter, with the fund owning 9.85 million shares. Third Point owned 3.67 million shares of Allergan at the end of the third quarter. Allergan PLC (NYSE:AGN)’s shares rose by 4.57% on Wednesday. The stock has gained 20.58% year-to-date.

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#4 Hertz Global Holdings Inc (NYSE:HTZ)

– Shares held (as of September 30): 39.19 million

– Total Value (as of September 30): $655.68 million

Rosenstein reduced his position in Hertz Global Holdings Inc (NYSE:HTZ) by 2.75 million shares quarter-over-quarter. Hertz, which is engaged in the car rental business, announced last month that it completed the sale of the France and Spain divisions of Hertz Equipment Rental Corporation (HERC) to LOXAM Group by transferring the entire share capital of Hertz Equipement France SAS and Hertz Alquiler de Maquinaria SLU. The deal included 60 locations in France, and two in Spain. Hertz Global Holdings posted impressive financial results for the third quarter, with the company’s income increasing year-over-year by 59% to $237 million. Its total revenue was $3.0 billion, representing a year-over-year decrease of 5%. Carl Icahn sees value in Hertz, as his fund Icahn Capital LP held 51.92 million Hertz shares at the end of September.

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On the next page, we will be discussing the top three picks of Barry Rosenstein.

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