Top 5 Stock Picks of Barry Rosenstein’s JANA Partners

3. Vonage Holdings Corp. (NASDAQ:VG)

JANA Partners’ Stake Value: $162,339,000

Percentage of JANA Partners’ 13F Portfolio: 12.98%

Number of Hedge Fund Holders: 29

Vonage Holdings Corp. (NASDAQ:VG), a cloud based communications provider, represents 12.98% of the total investments at JANA Partners as of the third quarter, with the hedge fund holding more than 10 million shares of the company, worth $162.3 million. 

Vonage Holdings Corp. (NASDAQ:VG) posted on November 4 its Q3 results. EPS in the period came in at $0.04, in line with analysts’ consensus estimates. The revenue increased 13.17% from the prior year quarter, reaching $358.34 million, surpassing estimates by $10.97 million. 

It was reported on November 22 that the Swedish telecommunications giant, Ericsson, would acquire Vonage Holdings Corp. (NASDAQ:VG) for $6.2 billion in cash. Following this news, Citi analyst Michael Rollins on November 30 downgraded Vonage Holdings Corp. (NASDAQ:VG) to Neutral from Buy with an unchanged price target of $21. The analyst expects the deal to close under the currently agreed-upon terms between Ericsson and Vonage Holdings Corp. (NASDAQ:VG). 

The largest Vonage Holdings Corp. (NASDAQ:VG) stakeholder is Park West Asset Management, with the hedge fund increasing its stake in the company by 32% in Q3, holding 12.58 million shares worth $202.9 million. Overall, 29 hedge funds were long Vonage Holdings Corp. (NASDAQ:VG) in Q3 2021, with total stakes amounting to $843 million.

Here is what Adestella Investment Management has to say about Vonage Holdings Corp. (NASDAQ:VG) in their Q4 2020 investor letter:

“Vonage (VG) – the VG thesis has largely played out as expected. The market has gradually shifted its focus from the declining consumer operations to the growing business ones, highlighted by the API unit. As its legacy home phone VOIP solutions continue to become a smaller and smaller portion of the overall pie, we think this trend will continue. If the API unit can continue to grow at 25-30%, that segment alone covers most of the enterprise value at just a ~6x sales multiple before giving any credit to the sizable UCaaS operations. The API unit’s closest comparable, Twilio (TWLO), currently trades at 31x sales, so it’s not unreasonable to think there’s upside to our estimate here. Shares have returned around 80% since our writeup (and slightly higher from our cost as we added in the weeks that followed), but we’ve maintained most of our position as the key growth drivers remain intact.”