| Barry Rosenstein (Bloomberg) |
Jana Partners, the flagship fund of the New York hedge fund firm of the same name, posted its first profit in three months, gaining 1.5 percent in May. As a result, the fund is up 2.7 percent for the year.
Jana Nirvana Fund, a more aggressive fund that typically maintains higher exposures than the firm’s flagship fund, rose 2.3 percent in May, boosting its gain for the year to 4.2 percent.
Jana’s profits in May were driven by its largest longs in its equity portfolio.
For example, Qualcomm, which became the activist hedge fund firm’s largest holding in the first quarter when it aggressively boosted its stake, climbed about 2.5 percent for the month.
Jana Partners’ founder Barry Rosenstein has called on the chipmaker to split its semiconductor business from its patent-licensing unit. Jana also wants the company to accelerate its stock buybacks, cut costs and revamp executive compensation.
At last month’s SALT conference, Rosenstein said he was confident Qualcomm will work with him on some reforms. “If they were to go off track and decide to fight us on some of these obvious changes, then the tenor of the discussions would change,” he warned. “But so far, I’m hopeful that they are heading in the right direction.”
Global drugstore chain Walgreens Boots Alliance, which this quarter slipped to the firm’s second-largest position, rose nearly 4 percent.
Meanwhile, online auction giant eBay, its third-largest holding, jumped 5.3 percent for the month.
In May, Jana liquidated its entire stake in specialty chemical maker Ashland — its fifth-largest holding at the end of the first quarter.
Jana lost about 4.5 percent from its fourth-largest holding — car rental giant Hertz Global Holdings.
And equipment-rental company United Rentals, its sixth-largest long, fell 8.6 percent.
Some of Jana’s gains were also offset by negative bets on a few indexes. In the first quarter, Jana used several exchange-traded funds (ETFs) to hedge the rise in the stock market.
For example, the firm nearly quadrupled its put option position in the ETF that tracks the direction of the Standard & Poor’s 500 and established new put positions in two other ETFs — one that mirrors stocks that comprise the Nasdaq 100 and another that invests in companies in the Consumer Discretionary Select Sector Index.
Jana currently manages $11 billion. This includes money committed to little-known Jana Strategic Investment, an activist drawdown fund whose fees are taken upon realization of investment gains.
In March the firm sold a 20 percent stake to Dyal Capital Partners, a Neuberger Berman unit that has been buying interests in hedge fund firms. This sale provides Jana with permanent capital that is not subject to sudden redemptions.
