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I Am Not Impressed By Engaged Capital’s Jamba Inc. (JMBA) Purchases

Engaged Capital has been adding to its already large position in Jamba Inc. (NASDAQ:JMBA) over the last month. If you go through its latest filing, you will see that its average cost of this large investment is about $11.50. If Glenn Welling followed Warren Buffett’s advice and invested in a small-cap index fund he would have been 40 percentage points ahead.

I don’t agree with Warren Buffett (he doesn’t agree with himself regarding investing in index funds either which is why he hired 2 investments managers instead of handing his cash to Vanguard) about passive investing, but I love Warren Buffett’s following quote:

“When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.”

Warren Buffett Quote 4

Retail stocks have been a graveyard for dozens of brilliant investors before. Does anyone remember Ackman’s Target or JC Penney fiascos? How about Eddie Lampert’s Sears investment? Activist investors can’t make people visit certain stores or buy certain juices or smoothies. The only thing they can effectively do is to force the management to shut down unprofitable locations and try to minimize costs. Unfortunately, what matters at the end of the day is whether consumers like the product or not. Engaged Capital has been involved with Jamba Inc. (JMBA) for more than 2.5 years. Whatever they have been doing over this period wasn’t enough to turn the tide.

As an investor I look for fat pitches.I don’t think Jamba Inc. is a fat pitch.

The details of Engaged Capital’s most recent transactions and filing are presented below:

Ownership Summary Table

Name Sole Voting Power Shared Voting Power Sole Dispositive Power Shared Dispositive Power Aggregate Amount Owned Power Percent of Class
Engaged Capital Flagship Master Fund 2,311,537 2,311,537 2,311,537 15.1%
Engaged Capital Flagship Fund 2,311,537 2,311,537 2,311,537 15.1%
Engaged Capital Flagship Fund, Ltd 2,311,537 2,311,537 2,311,537 15.1%
Engaged Capital 2,542,519 2,542,519 2,542,519 16.6%
Engaged Capital Holdings 2,542,519 2,542,519 2,542,519 16.6%
Glenn W. Welling 2,554,098 2,554,098 2,554,098 16.7%
Glenn W. Welling
Glenn W. Welling
Engaged Capital

Page 1 of 11 – SEC Filing

Washington, D.C. 20549
(Rule 13d-101)
§ 240.13d-2(a)
(Amendment No. 11)1
Jamba, Inc.
(Name of Issuer)
Common Stock, $0.001 par value per share
(Title of Class of Securities)
(CUSIP Number)
610 Newport Center Drive, Suite 250
Newport Beach, California 92660
(949) 734-7900
1325 Avenue of the Americas
New York, New York 10019
(212) 451-2300

(Name, Address and Telephone Number of Person

Authorized to Receive Notices and Communications)
February 17, 2017
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box ¨.
Note:  Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits.  See § 240.13d-7 for other parties to whom copies are to be sent.
1              The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).
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