Barry Rosenstein’s Jana Partners is an activist investor, meaning he tends to buy large positions in companies he thinks can improve benefits to shareholders, then works to put the necessary changes in place. Like fellow activist investors Bill Ackman of Pershing Square and David Einhorn of Greenlight, Rosenstein’s investment moves carry some weight. After all, he isn’t trying to profit from market inefficiencies – he is remedying inefficiencies within the company – so no investment decision is made lightly.
Barry Rosenstein has been working with McGraw-Hill (MHP) regarding its division into two separate companies – McGraw Hill Markets, which would be focused on financial information, and McGraw Hill Education, which would concentrate on publishing educational materials. Rosenstein actually proposed the plan to increase shareholder value. In the third quarter, Rosenstein increased his fund’s position in the company by 2.5 million shares, bringing Jana Partners’ total position to a value of roughly $420 million, or approximately one quarter of the Jana Partner portfolio value. MHP has gained 3.88% since the end of the third quarter, bringing its year to date return to 18.67%.
Barry Rosenstein scaled back his fund’s investment in El Paso (EP). He sold 6.9 million shares in the pipeline company during the third quarter. As of September 30, 2011, EP was a $302 million position for Rosenstein, taking up almost 18% of the Jana Partners’ portfolio value. Rosenstein may have been a little premature in his sale of those 6.9 million shares. Since the end of September, EP has returned 41.76%, bolstered largely by Kinder Morgan (NYSE:KMI)’s announcement in October that it would acquire the company in a deal worth over $20.7 billion, a deal that would make Kinder Morgan the largest natural gasoline operator in the U.S.
In the third quarter, Rosenstein made some surprising moves, like cutting his stake in Apple (NASDAQ:AAPL). In contrast, fund manager David Einhorn increased his position in AAPL, as did David Shaw of D.E. Shaw & Co, Rob Citrone’s Discovery Capital and Chase Coleman’s Tiger Global. AAPL is up 15.08% from January 1 through November 14, after losing -0.54% since the end of the third quarter. Rosenstein also cut his stake in gold, a move that John Paulson, Paulson& Co also made.
Rosenstein was more bullish on Google (NASDAQ:GOOG). In the third quarter, he upped his fund’s stake in GOOG and bought a new position in hospital operator HCA Holdings (NYSE:HCA) that is worth around $83 million. GOOG has returned 19.02% since the end of September, bringing its year to date performance to 1.43%. HCA is down -14.47% for the year after returning 31.60% since the end of the third quarter. Rosenstein’s other top stock holdings were Coca-Cola Enterprises (NYSE:CCE), Anadarko (NYSE:APC), and Expedia (NASDAQ:EXPE). He reduced his stakes in Rock Tenn (RKT), Convergys (NYSE:CVG), Sunoco (NYSE:SUN) and sold out Cablevision (NYSE:CVC) and LyondellBasell (NYSE:LYB).
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.