Barry Rosenstein’s Jana Partners disclosed a 2.9% activist stake in McGraw Hill (MHP) yesterday. Barry Rosenstein now has nearly 8.9 Million shares of MHP in his portfolio. At the end of first quarter Jana Partners had 3.06 Million shares of the company. They spend $193 Million and bought 4.6 Million more shares since the beginning of June. This means Rosenstein bought 1.2 Million shares of MHP in April and May as well.
MHP hasn’t been a bad investment in 2011. The stock returned more than 15% this year and is also up another 4% today. Rosenstein is one of the better performing hedge fund managers this year. The stocks in his 13F portfolio managed to beat the S&P 500 index by more than 3 percentage points since the end of first quarter. We also like his activist style of investing.
There are other hedge funds and prominent investors with mid-size stakes in MHP at the end of March. David Abrams’ Abrams Capital, Daniel Bubis’ Tetrem Capital, Jim Simons’ Renaissance, Jeffrey Gates’ Gates Capital, and Michael Price’s MFP Investors had between $18 Million and $60 Million in MHP.
One thing is interesting about this investment though. Barry Rosenstein’s Jana Partners didn’t acquire 5% of the company and partnered with a Canadian pension plan which acquired a 2.3% stake. This tells me that he isn’t as bullish as he can be on this stock. It’s not like he doesn’t have the money. Rosenstein invested $548 Million in El Paso (EP). I would rather imitate his EP investment where he fully committed his funds. By the way EP returned 14% since the end of first quarter and outperformed most of the stocks in the S&P 500 index.