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Barry Rosenstein founded Jana Partners in 2001, after spending 17 years in the field, working for companies like Merrill Lynch and Plaza Securities Corp.

Rosenstein’s hedge fund is a special type of fund called an activist fund. This means that instead of passively watching a company perform, Rosenstein buys a large enough position to allow him to provoke change. For example, on August 1, 2011, Rosenstein disclosed an activist stake in McGraw Hill (MHP) and he has used that position to push for the company’s breakup (Read the details).

Since Jana Partners became so vocally involved with McGraw-Hill, the value of the stock has gone through lots of ups and downs (it gained $3 in one day – August 2, 2011). Experts such as Lazard Capital are forecasting that McGraw Hill could go for as much as $70 per share if it breaks up and Rosenstein is taking no chances; he increased his initial position by 152%.

Company

Ticker

Value (x1000)

Activity

Return

EL PASO CORP

EP

489376

-20%

-9%

MCGRAW HILL COS

MHP

322957

152%

-10%

CHARLES RIV LABS INTL

CRL

167035

-7%

-24%

CONVERGYS CORP

CVG

112132

0%

-26%

LIBERTY MEDIA CORP

LSTZA

95911

6%

-5%

APPLE INC

AAPL

92147

16%

12%

FOREST OIL CORP

FST

88097

NEW

-25%

SUNOCO INC

SUN

75036

125%

-17%

LIBERTY MEDIA CORP

LINTA

65976

NEW

-10%

GOOGLE INC

GOOG

64763

NEW

11%

CABLEVISION SYS CORP

CVC

60594

-15%

-26%

EXPEDIA INC DEL

EXPE

54436

NEW

-1%

COCA COLA ENTERPRISES

CCE

52947

28%

-8%

HERTZ GLOBAL

HTZ

38943

41%

-31%

LYONDELLBASELL

LYB

37081

-48%

-12%

ROCK-TENN CO

RKT

32885

NEW

-21%

SEALED AIR CORP

SEE

30558

NEW

-22%

SAVIENT PHARMA Bond

SVNT

28804

144%

-43%

SPDR GOLD TRUST

GLD

22435

-24%

16%

VIACOM INC NEW

VIA.B

10240

-83%

-4%

GARMIN LTD PUT

GRMN

10074

NEW

-5%

LONE PINE RES INC

LPR

9930

NEW

-13%

OPKO HEALTH INC

OPK

9469

2%

5%

LIBERTY GLOBAL

LBTYA

4975

NEW

-12%

STRAYER ED INC

STRA

2755

NEW

-19%

ARCADIA RES INC

KAD

1897

0%

-38%

SAVIENT PHARMA

SVNT

509

NEW

-43%

Rosenstein’s greatest loss since the end of the second quarter was in Savient Pharmaceuticals (SVNT). It is a new position for Rosenstein and a significant loss, losing 43%. Rosenstein also lost big on his positions in Arcadia Res Inc (NYSEMKT:KAD) and Hertz Global (NYSE:HTZ), losing -38% and -31% respectively. Jim Simons’ Renaissance has the largest stake in SVNT among the 300+ funds we are tracking. Jim Simons’ fund is among the top performing hedge funds this year (see Simons’ top stock picks).

Since the end of the second quarter, Rosenstein’s largest returns have been in commodities and technology. His gold position in SPDR Gold Trust (NYSEARCA:GLD), which is his 19th largest overall, earned a return of 16%. He also gained big in his Apple Inc (NASDAQ:AAPL) position, which is his 6th largest overall, gaining 12%, while netting a decent 11% in his 10th largest holding, Google Inc (NASDAQ:GOOG). Apple is one of the most popular stocks among hedge funds.

Rosenstein’s performance since the second quarter (see important disclosure below) may be uncustomary but it should still give investors pause. His gamble on McGraw Hill may pay off, but the risk is significant. The company recently downgraded America’s credit rating and this will definitely attract some unusual regulatory interest. The stock’s recent decline reflects this fact. Buying in now may assuage some of that risk; the stock is priced very low right now compared with its price over the last few months. However, the risk is still there. David Abrams is among the most bullish hedge fund managers about MHP.

We like activist hedge funds and believe that investors can beat the market over the long-term by imitating their top stock picks.

Editor's note: Please note that the discussion of fund performance based on 13-F filings is inherently limited in its scope due to the following factors:

  1. 13-F filings do not include foreign holdings
  2. 13-F filings do not include short sales
  3. 13-F filings don't include cash holdings
  4. 13-F filings don't include derivatives
  5. 13-F filings don't include commodities and forex
  6. There is a lag (in this case about 45 days) from the time of the filing; it is unknown what may have happened to the portfolio in the interim

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

Source: Jana Partners' Top Stock Picks