Jana Partners’ recent performance woes have begun to seriously punish the New York firm.
The activist hedge fund firm, which is threatening to post its second straight losing year, has suffered sizable redemptions.
According to a document sent by Jana to its clients and obtained by Alpha, the firm had a total of $6.677 billion under mangement at the end of July, down from $11.6 billion one year ago.
Through July, Jana’s main funds were down 4 percent for the year. Through July, the riskier Jana Nirvana fund was off by 6 percent, following a gain of 2.9 percent last month.
So, rudimentary math suggests that Jana has returned more than $4 billion to investors over the last year, more than one third of its year-end assets. Ouch!
The timing is certainly not good. Remember, in March the firm sold a 20 percent stake to Dyal Capital Partners, a unit of New York money manager Neuberger Berman, which has been buying interests in hedge fund firms.
Jana declined to comment for this article.
Jana, whose main funds lost 5.4 percent in 2015, shook up its stock portfolio in the second quarter as it tried to get back into the black.
The firm established 24 new single-stock positions — excluding puts and calls — in the second quarter, the most in at least five quarters, according to its latest quarterly 13F filings. At the same time, Jana liquidated 18 of its existing single-stock positions in the second quarter, leaving just eight stocks that it had held in March.
The significant changes seemed to work in July, when Jana’s three main hedge funds each gained 1.9 percent for the month, trimming the loss to 4 percent for the year.
“Solid earnings reports from key long positions drove performance,” Jana told clients in its July performance and risk report. At the same time, the firm told clients it lost money on its short positions last month.
Specifically, in July longs were up 3.9 percent, while shorts lost 1.8 percent.
“We continue to research new value-plus catalyst and activist positions and have ample liquidity to seize opportunities as they arise,” the report added.
Jana continued to tinker with its portfolio in July. At the end of last month, two of its five largest holdings were not among its five largest positions disclosed in the quarterly 13F filing on Monday.
The three stocks that were the same were food giant ConAgra Foods, Jana’s largest long as of the end of the second quarter; Liberty Broadband Corp., which owns media properties and is a new position that became the firm’s second-largest long at the end of June; and longtime holding Walgreens Boots Alliance, the global drugstore chain and the third-largest long at quarter’s end.
By the end of July, Coca-Cola European Partners, a Western Europe soft-drink bottler, and packaged foods company Pinnacle Foods moved onto the top five list, replacing Alphabet, parent of Google, and Microsoft Corp. as the fourth- and fifth-largest holdings at the end of the second quarter. Coca-Cola European Partners and Pinnacle were both new positions in the second quarter.
Other additions to the top ten list at the end of the second quarter included online travel agency Expedia and Harris Corp., which makes communications and air traffic control equipment.
Altogether, by the end of July, Jana’s five largest longs accounted for nearly 31 percent of its assets, while the ten largest positions made up nearly half. On the short side, the top five positions accounted for less than 6 percent of assets. Entering August, Jana was some 52 percent net long, with a gross exposure of 111 percent.
Now we’ll wait to see whether this major overhaul of the portfolio will help turn around Jana’s funds and start attracting investors again.
