JANA Partners’ big bet on ConAgra Foods paid off Thursday, when the food processing giant reported much stronger quarterly results than Wall Street was expecting.
The stock surged nearly 13 percent, to close at $25.82, and is now up nearly 22 percent for the year. To put that into perspective, however in late January the stock hit its lowest point in about five years.
Jana’s investment in ConAgra is up about 50 percent since JANA reported its initial investment in the second quarter of 2015, if you factor in its spinoff of Lamb Weston in November 2016.
At the time, JANA claimed ConAgra had significantly underperformed “in shareholder value creation,” mostly blaming the “disappointing performance” of the company’s acquisition of private label giant Ralcorp in January 2013.
Last April JANA took an activist position in packaged foods company Pinnacle Foods, which became JANA’s largest position at the end of the second quarter. In late June ConAgra agreed to acquire Pinnacle for $10.9 billion in cash and stock in a deal that closed in October.
After the deal was finalized, JANA lifted its stake in ConAgra to roughly 13.5 million shares by year-end, up from 5.2 million shares the previous quarter, making it the activist’s biggest long position.
In late January JANA partner Scott Ostfeld was appointed to ConAgra’s board of directors, effective February 16. He also joined the board’s human resources committee.
JANA did not respond to requests for comment.
The hedge fund firm underwent a major restructuring earlier this year, when it closed down its flagship JANA Partners and JANA Nirvana funds.
Instead, it will focus solely on activism, specifically JANA Strategic Investments (JSI), a longer-duration activist strategy launched in 2010, and “other new engagement strategies.”
In early 2018 it launched two new activist funds: JANA Impact Capital, which emphasizes socially responsible investing, and JANA Strategic Investments Benchmark.
JANA Strategic Investments Benchmark is similar to JANA Strategic Investments, but its structure more resembles a hedge fund, whereby the investor puts their capital in all at once. The fund’s strategy is to invest all of the capital in activist situations, but will invest any unused capital in the Standard & Poor’s 500 stock index or equivalents.
“This is where we have delivered our best returns for investors, developed a genuine competitive advantage, made our mark on numerous industries and where we see our future and the richest opportunity set,” Rosenstein and his team wrote in the January 2019 letter sent to investors at the time and obtained by Institutional Investor.
At year-end JANA it held 29 different common stocks, much fewer than the 44 it held the previous quarter.
This story has been updated from an earlier version to reflect new information provided to Institutional Investor about the return on JANA’s ConAgra position.
