Top Buys of Jana Partners

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 |  Includes: EXPE, FST, GOOG, MHFI, QVCA, SUN, WRK
by: The Analyst Hub

JANA Partners LLC is a New York, NY-based hedge fund management firm founded by Barry S. Rosenstein and Gary E. Claar. The firm manages the JANA family of hedge funds.

Investment Strategy: JANA Partners LLC invests in both small-cap companies and established high profile large-cap companies. JANA Partners typically invests in value stocks. The firm employs an event-driven strategy, activist strategies, market neutral strategy, long/short equity strategy and a risk arbitrage strategy while making investments.

The following is a list of top stocks (by market value) that JANA Partners bought in the last quarter, as released in its most recent 13F filing with the SEC.

Stock

Symbol

Shares Held - 03/31/2011

Shares Held - 06/30/2011

The Mcgraw-Hill Companies, Inc.

(MHP)

3062647

7705959

Forest Oil Corp.

(NYSE:FST)

0

3298281

Liberty Media Interactive

(LINTA)

0

3934143

Google Inc.

(NASDAQ:GOOG)

0

127894

Expedia Inc.

(NASDAQ:EXPE)

0

1877762

Sunoco Inc.

(NYSE:SUN)

799753

1798987

Rock-Tenn Co.

(RKT)

0

495703

Click to enlarge

My favourite long candidate among above stocks is The Mcgraw-Hill Companies, Inc. The company is seeing a lot of activist interest off late. Jana Partners and Ontario Teacher’s Pension Plan filed 13D on Aug 1 indicating that they will be activist investors in MHP. Their combined shareholding represents 5.2% of total shares outstanding. MHP’s management has already taken actions in the recent past to increase shareholder value like selling BusinessWeek, announcing planned divesture of its Broadcast group and instituting new share buybacks.

The recent activist efforts are likely to speed up additional steps. I believe that activists are likely focused on creating value through a company break-up. The company is in four main businesses: Information and Media services, Educational & Professional publishing, Financial Services (ratings) and Financial Services (non ratings). A potential break up of these businesses can lead mid 50s target price. MHP’s shares have declined to a four month low after recent market sell-off. The shares are now available at lower than what activist investors have paid and risk rewards are favourable in my opinion.

For other stocks in the above list, here are some of the specifics about these companies, including a brief description of their businesses, growth expectations (top line and bottom line):

Forest Oil Corporation is an independent oil and gas company engaged in the acquisition, exploration, development, and production of oil, natural gas, and natural gas liquids in North America. Forest Oil's EPS forecast for the current year is $1.20 and next year is $1.73. According to consensus estimates, its top line is expected to grow 6.90% in the current year and 14.70% next year.

Liberty Media Corporation is a holding company, and through its subsidiaries, is engaged in the video and online commerce, media, communications and entertainment industries. The Company operates in three reportable segments: Leisure, the TripAdvisor Media Network and Egencia. Liberty Media's EPS forecast for the current year is $0.74 and next year is $0.96. According to consensus estimates, its top line is expected to grow 6.60% in the current year and 7.30% next year.

Google is primarily an internet search company. The Company maintains an index of Websites and other online content, and make it available through its search engine to anyone with an Internet connection. The Company generates revenue primarily by delivering online advertising. Google's EPS forecast for the current year is $35.47 and next year is $41.88. According to consensus estimates, its top line is expected to grow 30.30% in the current year and 22.20% next year.

Expedia, Inc. is an online travel company. The Company makes available, on a stand-alone and package basis, travel products and services provided by numerous airlines, lodging properties, car rental companies, destination service providers, cruise lines and other travel product and service companies. Expedia's EPS forecast for the current year is $1.95 and next year is $2.23. According to consensus estimates, its top line is expected to grow 17.30% in the current year and 11.90% next year.

Sunoco, Inc. through its subsidiaries, is principally a petroleum refiner and marketer and chemicals manufacturer with interests in logistics and cokemaking. Sunoco’s petroleum refining and marketing operations include the manufacturing and marketing of a range of petroleum products, including fuels and some petrochemicals. Sunoco's EPS forecast for the current year is $0.47 and next year is $2.26. According to consensus estimates, its top line is expected to grow 9.20% in the current year and 2.76% next year.

Rock-Tenn Company is a manufacturer of packaging products, recycled paperboard, containerboard, bleached paperboard and merchandising displays. Rock-Tenn's EPS forecast for the current year is $5.32 and next year is $7.02. According to consensus estimates, its top line is expected to grow 81.70% in the current year and 86.40% next year.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.