Another month, another positive number in what has turned out to be a remarkable midyear turnaround for Barry Rosenstein’s JANA Partners. The New York hedge fund firm’s namesake fund, which was solidly in losing territory through June, posted a 0.9 percent gain in December, its sixth-straight profitable month. As a result, the long-short, sometime-activist fund finished the year up between 2.2 percent and 2.4 percent, depending on the fund class. The more turbocharged JANA Nirvana fund returned 1.3 percent in December and rose between 3.2 percent and 3.5 percent for the year.
Sure, JANA Partners still came up short of the Standard & Poor’s 500 stock index’s 9.5 percent gain for the year and is still below its high-water mark after losing 5.4 percent in 2015. However, the firm is no doubt satisfied, given that its main fund was down nearly 6 percent at the halfway mark of 2016.
Since its 2001 inception JANA Partners has compounded at 11.3 percent, compared with just 6.4 percent for the S&P 500.
As we have reported in the past, JANA heavily revamped its portfolio in both the second and third quarters. Nine of JANA’s 13 largest single-stock long positions were established in one of those two periods.
The largest positions in this group all established in the second quarter were Liberty Broadband Corp., which owns media properties and became JANA’s No. 2 long in the second quarter; advisory firm Willis Towers Watson; Johnson Controls International, formerly known as Tyco International and a provider of security products and fire detection products, among others; Harris Corp., the technology services provider and defense contractor; and Coca-Cola European Partners, a bottling company.
Since the end of June, their performance was mixed. However, the winners surged at a much greater rate than the losers declined. Liberty rose more than 23 percent, while Harris surged nearly 23 percent.
On the other hand, Willis Towers Watson declined 1.6 percent, Johnson Controls fell 3.3 percent, and Coca-Cola European Partners fell 12 percent. Universal Health Services, one of the biggest U.S. hospital management companies and JANA’s largest new single-stock long in the third quarter, fell nearly 14 percent in the final three months of the year.
Meanwhile, ConAgra Brands, the conglomerate that has been JANA’s largest long for the past four reported quarters, added about 8.6 percent in the second half of the year.
