Top 10 Stock Picks of Barry Rosenstein’s JANA Partners

In this article, we discuss the top 10 stock picks of Barry Rosenstein’s JANA Partners. If you want to skip our detailed analysis of these stocks, go directly to the Top 5 Stock Picks of Barry Rosenstein’s JANA Partners

Barry Rosenstein is the managing partner and co-portfolio manager at JANA Partners. After graduating from Lehigh University in 1981 and receiving his MBA from the University of Pennsylvania’s Wharton School of Business in 1984, Rosenstein founded JANA Partners in 2001. 

Before starting his own hedge fund, Rosenstein worked in management positions across different investment firms and private equity funds, including Sagaponack Partners, Genesis Merchant Group, Reatta Partners, and Plaza Securities Corporation. Rosenstein started his career in 1984 as an investment banker specializing in mergers and acquisitions with Merrill Lynch in New York. Barry Rosenstein has also served as a board of director at multiple companies including Cobra Electronics Corporation, Copart, Inc. (NASDAQ:CPRT), Convergys Corporation, and Walgreens Boots Alliance, Inc. (NASDAQ:WBA). 

Barry Rosenstein is an activist investor who uses a fundamental value discipline to find undervalued public companies and leverages shareholder engagement to capitalize on that value. It was revealed at the end of August that Rosenstein, who holds a significant stake in Vonage Holdings Corp. (NASDAQ:VG), is pushing the company to possibly sell all of its business or at least part of it, since he believes that the company’s corporate structure is hindering the underlying businesses from unlocking their true potential, which largely impacts the company’s ability to deliver good shareholder returns. Vonage Holdings Corp. (NASDAQ:VG) stock rose 11% after Rosenstein’s stance on the company was announced. 

Similarly, JANA Partners holds a position in Macy’s, Inc. (NYSE:M), and in October, the hedge fund urged Macy’s, Inc. (NYSE:M) to spin off its e-commerce business segment, following the footsteps of its competitor, Saks Fifth Avenue. Since the valuation of brick and mortar stores does not reflect the actual worth of their online segment, JANA Partners said that Macy’s, Inc. (NYSE:M) stock could double if the company went ahead with the corporate spin off of its e-commerce business. 

The most notable stocks from Barry Rosenstein’s third quarter portfolio include Macy’s, Inc. (NYSE:M), Laboratory Corporation of America Holdings (NYSE:LH), Encompass Health Corporation (NYSE:EHC), and Vonage Holdings Corp. (NASDAQ:VG). 

Top 10 Stock Picks of Barry Rosenstein's JANA Partners

Barry Rosenstein of JANA Partners

Our Methodology

We used the third quarter portfolio of Barry Rosenstein’s JANA Partners to select the top 10 stocks of the hedge fund. Further, we have mentioned the Q3 earnings, analyst ratings, and the hedge fund around sentiment each stock to give readers additional context on the companies. 

Top Stock Picks of Barry Rosenstein’s JANA Partners

10. BlackSky Technology Inc. (NYSE:BKSY)

JANA Partners’ Stake Value: $10,350,000

 

Percentage of JANA Partners’ 13F Portfolio: 0.82%

 

Number of Hedge Fund Holders: 21

BlackSky Technology Inc. (NYSE:BKSY) offers global monitoring services that deliver essential alerts to relevant authorities in times of distress. BlackSky Technology Inc. (NYSE:BKSY) leverages artificial intelligence, cloud computing, multi-sensor data fusion, activity analysis, and autonomous satellite tasking to provide accurate and essential alerts. 

BlackSky Technology Inc. (NYSE:BKSY) is a new addition to Barry Rosenstein’s JANA Partners’ Q3 portfolio, with the hedge fund owning 1 million shares of the company, worth $10.35 million, representing 0.82% of the fund’s total 13F securities. 

On November 12, BlackSky Technology Inc. (NYSE:BKSY) reported its Q3 earnings, posting a loss per share of $0.67. Revenue for the quarter totaled $7.9 million, up 49% year-over-year. 

BlackSky Technology Inc. (NYSE:BKSY)’s newest satellites began revenue generating commercial operations within 18 hours of deployment, according to the chief operations officer of the company on December 13. The successful Rocket Lab Mission of BlackSky Technology Inc. (NYSE:BKSY) doubled the imaging capacity due to the company’s high-resolution small satellite constellation. 

Chase Coleman and Feroz Dewan’s Tiger Global Management is the leading stakeholder of BlackSky Technology Inc. (NYSE:BKSY) in Q3, out of the 21 hedge funds that were bullish on the stock. Tiger Global Management added BlackSky Technology Inc. (NYSE:BKSY) in its portfolio in the third quarter, holding a $51.75 million stake. 

BlackSky Technology Inc. (NYSE:BKSY) is a top stock pick of Barry Rosenstein’s JANA Partners, just like Macy’s, Inc. (NYSE:M), Laboratory Corporation of America Holdings (NYSE:LH), Encompass Health Corporation (NYSE:EHC), and Vonage Holdings Corp. (NASDAQ:VG).

9. Valvoline Inc. (NYSE:VVV)

JANA Partners’ Stake Value: $39,767,000

 

Percentage of JANA Partners’ 13F Portfolio: 3.18%

 

Number of Hedge Fund Holders: 23

Barry Rosenstein, via JANA Partners, owns 1.27 million Valvoline Inc. (NYSE:VVV) shares, worth $39.76 million, representing 3.18% of the firm’s total Q3 investments. Valvoline Inc. (NYSE:VVV) is an American company offering motor oil, additives, and lubricants under the Valvoline brand, in addition to owning car repair centers in the United States. 

In the third quarter results, published on November 3, Valvoline Inc. (NYSE:VVV) posted an EPS of $0.50, beating estimates by $0.03. The quarterly revenue gained 28.07% year-over-year, amounting to $835 million, outperforming estimates by $6.12 million. 

Goldman Sachs analyst Jason English on November 16 added Valvoline Inc. (NYSE:VVV) to the firm’s “Americas Conviction List” and maintained a Buy rating on the shares with a price target of $53, up from $45. The analyst stated that the company’s recent quarterly results and outlook highlighted that both of Valvoline Inc. (NYSE:VVV)’s businesses are achieving “substantial” market share gains, which should bring enduring benefits. 

On October 25, Valvoline Inc. (NYSE:VVV) announced the launch of XEV, the company’s first China-based release of hybrid, plug-in hybrid, and pure electric vehicle products. XEV product line works to address needs specific to hybrid and EVs, including battery temperature variations, powertrain performance, brake system corrosion, and seal bearing failure.

In Q3 2021, 23 hedge funds tracked by Insider Monkey were long Valvoline Inc. (NYSE:VVV), with stakes valued at $641.8 million. Glenn Greenberg’s Brave Warrior Capital is the top Valvoline Inc. (NYSE:VVV) stakeholder, with 7.61 million shares worth $237.5 million. 

Here is what Wasatch Core Growth Fund has to say about Valvoline Inc. (NYSE:VVV) in its Q2 2021 investor letter: 

“Another significant contributor was Valvoline, Inc. (VVV), a company that manufactures lubricants and car parts and operates oil-change service centers. In addition to benefiting from the economic reopening, the company has discovered the advantages of making a mobile app available. Valvoline customers can use the app to find the closest service center and view live estimated wait times. Certainly, the adoption of technology to improve productivity and convenience isn’t a new theme. But we see mobile digitalization as a highly disruptive innovation that creates additional relationships among companies, distributors and customers. As a result, mobile digitalization is a competitive consideration in more and more of the companies that we evaluate for investment. In the first quarter, Valvoline’s stock declined partially because investors worried about the increasing popularity of electric vehicles (EVs)—which are much less dependent on petroleum products. But the stock rebounded in the second quarter, we think partly based on the realization that EVs still represent a tiny percentage of new cars sold and an even smaller percentage of cars in service. Moreover, Valvoline reported strong earnings and raised projections for the future.”

8. SPDR S&P 500 ETF Trust (NYSE:SPY)

JANA Partners’ Stake Value: $61,339,000

 

Percentage of JANA Partners’ 13F Portfolio: 4.90%

 

Number of Hedge Fund Holders: 69

In the third quarter of 2021, SPDR S&P 500 ETF Trust (NYSE:SPY) was a popular holding among the smart money, with 69 hedge funds holding stakes worth $6.25 billion in the ETF. This is compared to 76 funds being bullish on SPDR S&P 500 ETF Trust (NYSE:SPY) in the preceding quarter, with a total stake value of $4.96 billion. 

One of the top SPDR S&P 500 ETF Trust (NYSE:SPY) stakeholders from the third quarter is LMR Partners, increasing its stake in the ETF by 14%, holding 2.7 million shares worth $1.15 billion. 

SPDR S&P 500 ETF Trust (NYSE:SPY) is the largest exchange traded fund in the world, designed to track the movement of the S&P 500 Index. Barry Rosenstein’s JANA Partners holds 142,934 shares of SPDR S&P 500 ETF Trust (NYSE:SPY) as of the third quarter, worth $61.3 million, representing 4.90% of the fund’s total investments. 

In addition to Macy’s, Inc. (NYSE:M), Laboratory Corporation of America Holdings (NYSE:LH), Encompass Health Corporation (NYSE:EHC), and Vonage Holdings Corp. (NASDAQ:VG), SPDR S&P 500 ETF Trust (NYSE:SPY) is a notable stock from Barry Rosenstein’s Q3 portfolio. 

7. Macy’s, Inc. (NYSE:M)

JANA Partners’ Stake Value: $104,542,000

 

Percentage of JANA Partners’ 13F Portfolio: 8.36%

 

Number of Hedge Fund Holders: 41

Macy’s, Inc. (NYSE:M) is an American department store chain, founded in 1858, offering clothing, footwear, accessories, bedding, furniture, jewelry, beauty products, and housewares. In addition to the New York flagship store and 516 outlets around the US, Macy’s, Inc. (NYSE:M) has a strong e-commerce segment. 

Macy’s, Inc. (NYSE:M) is a new arrival in JANA Partners’ Q3 portfolio, with the hedge fund holding 4.62 million Macy’s, Inc. (NYSE:M) shares, worth $104.5 million, representing 8.36% of the total Q3 securities. A total of 41 hedge funds in the third quarter database of Insider Monkey were long Macy’s, Inc. (NYSE:M), up from 35 funds in the prior quarter. 

Cowen analyst Oliver Chen on December 10 considered Macy’s, Inc. (NYSE:M)’s to be one of the best ideas for 2022, stating that he views the company as an increasingly data centric retailer, driving better customer engagement through personalization, store fleet revisions, inventory, and pricing optimization. The analyst said that Macy’s, Inc. (NYSE:M)’s valuation is also compelling due to its free cash flow, a $2 billion real estate value, and the company approaching 40% digital penetration.

On November 18, Macy’s, Inc. (NYSE:M) posted its Q3 results, announcing earnings per share of $1.23, beating estimates by $0.90. The revenue jumped 36.34% year-over-year to $5.44 billion, exceeding estimates by $205.38 million. 

The largest Macy’s, Inc. (NYSE:M) stakeholder from Q3 2021 is Arrowstreet Capital, increasing its stake in the company by 33%, holding 10.5 million shares worth $238.94 million.

6. Laboratory Corporation of America Holdings (NYSE:LH)

JANA Partners’ Stake Value: $108,458,000

 

Percentage of JANA Partners’ 13F Portfolio: 8.67%

 

Number of Hedge Fund Holders: 58

Laboratory Corporation of America Holdings (NYSE:LH), on October 28, posted solid Q3 results. EPS in the quarter equaled $6.82, beating estimates by $1.90. Revenue over the period totaled $4.06 billion, outperforming estimates by $427.23 million. 

Laboratory Corporation of America Holdings (NYSE:LH) manages the largest clinical laboratory network in the world, operating 36 major laboratories in the US. In the third quarter, JANA Partners held 1.73 million Laboratory Corporation of America Holdings (NYSE:LH) shares, worth $108.45 million, representing 8.67% of the firm’s total investments. 

Wells Fargo analyst Dan Leonard on December 14 raised the price target on Laboratory Corporation of America Holdings (NYSE:LH) to $340 from $330 and kept an Overweight rating on the shares, citing growth for Laboratory Corporation of America Holdings (NYSE:LH) amidst increased COVID-19 testing.

A total of 58 hedge funds reported owning stakes in Laboratory Corporation of America Holdings (NYSE:LH) in Q3 2021, up from 53 funds in the previous quarter. Gabriel Plotkin’s Melvin Capital Management is the leading Laboratory Corporation of America Holdings (NYSE:LH) stakeholder, with 1.9 million shares worth $534.73 million.

Here is what Weitz Investment Management Hickory Fund has to say about Laboratory Corporation of America Holdings (NYSE:LH) in its Q3 2021 investor letter:

“Labcorp has also been a year-to-date contributor as the company’s traditional lab business continues to recover and as it becomes clear that COVID-related demand will remain elevated for an extended period.”

 

 

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Disclosure: None. Top 10 Stock Picks of Barry Rosenstein’s JANA Partners is originally published on Insider Monkey.