Clean Harbors Inc (CLH), PetSmart Inc. (PETM): Why Are Activists Selling These Stocks?

In the case of PetSmart, Inc. (NASDAQ:PETM), Jana Partners appear more than content to continue selling large chunks of their holding around the $81.00 level, despite the pet retailer’s impending sale to a group led by BC Partners. It was announced on December 14 that PetSmart, Inc. (NASDAQ:PETM) had agreed to be acquired by the BC Partners-led consortium for $83.00 per share, a move that Jana had long advocated. James A. Star‘s Longview Asset Management, another major PetSmart shareholder also announced their intention to approve the transaction.

However at least one of the company’s other investors has launched a lawsuit alleging that the deal undervalues PetSmart and doesn’t provide fair value for shareholders. That likely did not factor into Jana’s decision to sell off shares however, as they have already achieved their objective to see the company sold off, which they disclosed when they first took their position in the company last summer.

The investment in PetSmart, Inc. (NASDAQ:PETM), one of the most maligned large cap stocks on the market, will ultimately be a win for Jana, who will see a 33%+ return from their initial investment, having taking up their position in the second quarter and third quarters when the stock dipped to 2-year lows.

Other funds we follow that have positions in PetSmart, Inc. (NASDAQ:PETM) include the aforementioned Longview Asset Management with 8.93 million shares, John Paulson’s Paulson & Co. with 4.17 million shares, and Joshua Friedman and Mitchell Julis’ Canyon Capital Advisors with 1.41 million shares.

Disclosure: None