Jana Partners is an activist hedge fund. This means that it take positions in its investments that are large enough to afford the firm a voice in the company’s operations. Frequently, this means that it will buy a position in a company that it thinks shows promise and agitates the waters in order to provoke the sort of change that adds shareholder value. These changes can range from small operational shifts to selling the entire company – and some do it better than others.
Piggybacking on Activist Investments
Piggybacking on activist investments or otherwise mirroring them can pay off for an individual investor. Usually, if a hedge fund buys an activist stake in a company, that position is large enough to require that it be disclosed shortly thereafter, so you aren’t jumping on the bandwagon after it has already left the station in most cases. Secondly, the hedge fund managers that do this are very experienced. The change activist investors incite is almost always a good (read:profitable) thing for shareholders, but there is still risk and, again, some funds do better than most with this strategy.
Activist Hedge Funds
The Wall Street Journal recently looked at several high profile activist hedge funds and compared their performances, calculating the total return earned on their top ten positions since the date of inception. The article looked at Carl Icahn’s Icahn Capital, Barry Rosenstein’s Jana Partners, Bill Ackman’s Pershing Square, Ralph Whitworth’s Relational Investors, Dan Loeb’s Third Point and Nelson Peltz’s Trian Capital. Out of these six hedge funds, Trian had the lowest performance, losing 30.3% since its inception. Icahn Capital did better, returning 5.7% since its inception. Pershing Square ranked next, returning 26.9% since its inception. Third Point and Relational Investors were roughly tied. Their clone portfolios returns 173.9% and 173.4% respectively. The big winner was Jana Partners, returning over 200% since its inception, January 31, 2003.