A pair of activist investors have disclosed selling off large chunks of their positions in recent filings with the SEC. The first filing revealed that Ralph V. Whitworth’s Relational Investors has shed 1.33 million shares of their position in Clean Harbors Inc (NYSE:CLH), leaving them with 4.55 million shares, and a 7.59% activist stake. In the second filing, Barry Rosenstein’s Jana Partners disclosed that they have sold another 2.56 million shares of PetSmart, Inc. (NASDAQ:PETM), leaving them with 5.05 million shares, and a 5.1% activist stake. The most recent sell-off follows a similar move two weeks ago, when the fund shed 2.08 million shares.
Relational initiated their position in Clean Harbors Inc (NYSE:CLH) during the first quarter of 2014 and quickly built it into a large activist position early in the second quarter. At the time, they announced their intentions to engage the waste collection and disposal company’s board on how best to maximize value, including through re-focusing on its core business and spinning-off other assets.
The recent sale of shares by Relational comes just days after Clean Harbors announced its intention to finally do just that, and spin off its oil and gas field services business into a separate entity. Those assets, which generated $250 million during the first three quarters of 2014, were largely acquired back in 2009, and have grown greatly since then. They now provide services ranging from exploration and seismic and drilling support, to production services and disposal of drill cuttings. Though the assets experienced a downturn over the course of the past year, they are considered an attractive long-term business that is bound to rebound, given its cyclical nature. The sale process will be overseen by Goldman Sachs Group Inc (NYSE:GS), and could take as long as 12 months to complete.
The news sent Clean Harbors’ stock up $1.36 to $47.58 on January 20, and prompted analysts at Zacks to raise their rating on Clean Harbors from “underperform” to “neutral” in a note to investors on January 23. Zacks maintained a price target of $50.20 on the stock.
Clean Harbors Inc (NYSE:CLH) most recent quarterly results were a disappointment, coming in well below analysts’ expectations. They had earnings per share of just $0.45 compared to the consensus estimate of $0.63, and their $851.50 million in revenue was $50 million short of estimates. Revenue for the quarter was down 6.2% from the same period in 2013.
Other funds we track with positions in Clean Harbors Inc (NYSE:CLH) include Lee Munder’s Lee Munder Capital Group with 734,686 shares, Ian Simm’s Impax Asset Management with 546,107 shares, and Douglas Dossey and Arthur Young’s Tensile Capital with 410,000 shares.
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
