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Jana Partners was founded by Barry Rosenstein in 2001. Rosenstein created the fund 17 years after his graduation from Wharton (1984 - MBA) and building experience with such big names as Sagaponack Partners, Genesis Merchant’s Group, Reatta Partners, Plaza Securities Corp. and Merrill Lynch.

Since the firm’s inception, Rosenstein has moved Jana Partners toward an activist role in the hedge fund market; he purchases large interests for the hedge fund, then uses that position to incite change. This type of activist strategy has produced a fair amount of ups and downs for Jana Partners (-23.4% in 2008 vs 23.9% in 2009), but overall the hedge fund is a solid performer. It earned 8.4% return in 2010 and, since the end of March 2011, has outperformed the S&P 500 by 4 percentage points.

For instance, Rosenstein disclosed a stake of nearly 3 percent in the media giant McGraw Hill (MHP) on August 1 and has been pushing for McGraw-Hill’s breakup ever since, forcing several strategy meetings with the 123-year-old company. This was the same strategy Jana Partners used earlier in 2011 when it bought a large position in the energy company El Paso (EP) and subsequently pushed for its split, which came just a few weeks after the purchase.

The McGraw-Hill move is creating serious buzz. The stock has risen consistently since Jana Partners involvement became public, growing 33% in value on August 1 and over 7 percent on August 2 to $44.43, its largest advance since September 2009. According to Lazard Capital Markets, if McGraw-Hill breaks up, stock value could be as high as $70 per share, and should be at least $55 at a minimum.

CompanyName

Ticker

Value

Activity

Return

EL PASO CORP

EP

547946

330%

9%

SMURFIT STONE CONTAINER

SSCC

200903

50%

7%

CHARLES RIVER LABS INTL INC

CRL

168881

-3%

-2%

WILLIAMS COS

WMB

154631

38%

-2%

MCGRAW HILL COS INC

MHP

120668

New

13%

CONVERGYS CORP

CVG

118051

1%

-8%

CABLEVISION SYSTEMS CORP

CVC

97385

50%

-4%

LIBERTY MEDIA CORP NEW

LSTZA

93477

178%

-2%

DOLLAR THRIFTY

DTG

93057

New

5%

PFIZER INC

PFE

90172

New

-10%

APPLE INC

AAPL

82526

-19%

12%

LYONDELLBASELL INDUSTRIES

LYB

72625

-29%

-5%

COMCAST CORP NEW

CMCSK

72587

15%

-4%

KINDER MORGAN INC

KMI

56421

New

-5%

VIACOM INC NEW

VIA

54742

21%

-3%

YAMANA GOLD INC

AUY

46431

New

10%

COCA COLA ENTERPRISES

CCE

38852

-65%

1%

SUNOCO INC

SUN

36461

New

-14%

EL PASO CORP CALL Option

EP

36000

New

9%

WEATHERFORD INTL LTD NEW

WFT

35111

New

-8%

SPDR GOLD TRUST

GLD

28466

-77%

15%

HERTZ GLOBAL HOLDINGS INC

HTZ

27182

New

-17%

SAVIENT PHARMACEUTICALS

SVNT

14003

New

-38%

OPKO HEALTH INC

OPK

9348

New

14%

ACXIOM CORP

ACXM

4355

New

-9%

ARCADIA RESOURCES INC

KAD

3238

0%

-62%

AEROPOSTALE INC

ARO

Sold Out

-34%

CAREFUSION CORP

CFN

Sold Out

-13%

DISCOVERY COMMUNICA

DISCK

Sold Out

-2%

FORD MOTOR CO DEL

F

Sold Out

-21%

GENERAL GROWTH PPTYS

GGP

Sold Out

0%

GENERAL MOTORS CO

GM

Sold Out

-13%

HILLTOP HOLDINGS INC

HTH

Sold Out

-13%

HOSPITALITY PROPERTIES TR

HPT

Sold Out

7%

MADISON SQUARE GARDEN

MSG

Sold Out

-3%

NATIONAL FUEL GAS CO N J

NFG

Sold Out

-5%

SAVIENT PHARMA Class 2

SVNT

Sold Out

-38%

VISA INC

V

Sold Out

14%

VODAFONE GROUP

VOD

Sold Out

-1%

ZORAN CORP

ZRAN

Sold Out

-21%

Jana Partners’ greatest losses were in Arcadia Resources, losing a staggering 62%. However, Rosenstein did not change his position in the company even though other hedge funds did, such as James Dinan’s York Capital Management. Savient also netted a loss for Jana Partners, producing a -38% return. The stock has attracted the attention of such big names as Ken Griffin’s Citadel Investment Group, Ionic Capital Management and Levin Capital Strategies. However, these companies have bonds with Savient as opposed to Rosenstein’s stock position. Rosenstein’s position is risky but if Savient gets FDA approval for its Kyrstexxa drug the returns could be huge.

Rosenstein’s greatest gains since March 31 were in gold, namely the SPDR Gold Trust. However, the 15% gain came from reducing Jana Partners’ position in the company by 77 percent. Rosenstein’s Jana Partners hedge fund was able to show a strong performance since March 31 thanks largely to its returns in OPKO Health 14%, McGraw Hill 13%, and Apple 12%.

Jana Partners is a solid performer, we like Rosenstein’s returns overall and he seems to have had an early position in some major gains. However, investing like Rosenstein is not for the faint of heart; an investor mirroring Rosenstein’s moves is likely to experience huge gains and losses, so investor beware.

Disclosure: I am long VOD.

Source: A List of Jana Partners' Stock Picks