JANA Partners’ Latest Stock Picks

JANA PARTNERSJANA Partners, managed by activist investor Barry Rosenstein, has a simple tagline for its event-related approach: “ignore the crowd.” This $2.4 billion hedge fund has potentially made some interesting plays as of late, including an alleged short position in Facebook (NASDAQ:FB). In a recent letter to investors, the company disclosed its positive thoughts about Coca-Cola Enterprises (NYSE:CCE) and a number of shorting ideas.

The fund only owned 2.56 million shares of Coca-Cola Enterprises as of March 31, a position that likely more than doubled as JANA returned CCE to its “top 5 positions.” Its overall rationale is that, with a deteriorating economic picture in Europe, businesses like CCE’s are very appealing. CCE is the “monopoly” distributor of Coca-Cola (NYSE:KO) products on the continent, and JANA sees a secular growth trend for this business. CCE is also one of the top six holdings at James Crichton’s and Adam Weiss’ hedge fund Scout Capital, which held 8.1 million shares as of March 31 (you can view the rest of their portfolio here).

One of the catalyst events that JANA sees for CCE is its potential purchase of German bottling operations from Coca-Cola, which would give it a sweep as the major distributor of Coke products in Western Europe. CCE’s revenue for the second quarter 2012 was $2.2 billion, down from $2.4 billion year-over-year. The company does have some competitive contracts relating to the London Summer Olympics and the Euro Cup 2012 that might also act as business catalysts. That said, while worldwide sales volume for Coca-Cola products increased 4 percent in the second quarter, sales volume decreased 4 percent during the same period in Europe.

JANA’s macroeconomic thesis also has it making other short sales in “companies in the natural gas liquids distribution chain suffering from supply-glut pricing pressures.” Thus, we might see a shakeup when JANA next discloses its complete holdings.  As of March 31, the fund held 6.45 million shares of Marathon Petroleum (NYSE:MPC), the downstream refiner and distributor spin-off of Marathon Oil (NYSE:MRO). This made Marathon Petroleum JANA’s largest holding. In the first quarter, Marathon Petroleum’s net income increased 13 percent year-over-year. John Burbanks Passport Capital owns 2.4 million shares in Marathon Petroleum as well.

Marathon Petroleum lacks the extensive European retail segment that Phillips 66 (NYSE:PSX), the downstream spin-off of ConocoPhillips (NYSE:COP), possesses. Phillips 66 is engaged in heavy marketing activities in the European retail segment with over 1000 owned sites. In contrast, Marathon’s six refineries and major retail segment (including Speedway locations) are located in the United States. With the decrease in demand for natural gas liquids thus far in 2012, Phillips 66 saw compromised earnings. Demand for refined oil products has remained flat over the past year while overall supply has increased significantly. Despite this, Warren Buffett recently disclosed that Berkshire Hathaway has a significant position in Phillips 66 (you can see the hedge funds portfolio here).

The fund also mentioned that its “favorite” short positions include “a big box retailer whose category is being entered by Amazon.” Hmm… sounds like a jab at Best Buy (NYSE:BBY), the Amazon (NASDAQ:AMZN) victim whose shares have been hemorrhaging value over the past two years and are presently trading below their rock-bottom Great Recession levels. Hedge fund giant David Einhorn probably would have appreciated this advice before his Greenlight Capital lost $100 million on a Best Buy resurgence bet.

Disclosure: Brian owns shares in Phillips 66.

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Top 10 Highest Paying Jobs in the World

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!