Barry Rosenstein and his event-driven, activist hedge fund JANA Partners haven't had it easy over the past few years. The fund's assets under management were slashed by more than 50% between August 2015 and December 2017, falling to just $4.6 billion from $11 billion during that time as the fund's performance lagged the market.
According to JANA's Q4 2017 investor letter, the JANA Master Fund posted 5.6% gains in 2017, widely trailing the market, while it managed just 2.3% returns in 2016. JANA has scored some wins in 2018, including an estimated $144 million windfall from its stake in Pinnacle Foods, which was sold to Conagra Brands, Inc. (NYSE:CAG) in June. However, the year is ending on a sour note, with 6.3% losses in October representing the fund's worst month in a decade.
Redemptions and underperformance have cost not only JANA, but Rosenstein himself, whose own fortunes have suffered alongside those of his fund. The former billionaire, who was credited with having a net worth of $1.3 billion several years ago, is no longer listed on Forbes' real time ranking of the world's billionaires.
JANA Partners' 13F portfolio contained 53 holdings on September 30, which were valued at $3.29 billion. That figure was down by $485 million quarter-over-quarter and a mere fraction of its peak value of $19.31 billion from four years earlier. JANA Partners increased its exposure to consumer staples (30.99% weighting) and healthcare (21.39%) stocks during Q3, while lowering its exposure to tech (16.47%) and communications (3.88%) stocks.
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On the next page we'll check out four stocks that JANA Partners was bullish on in Q3, and one very popular stock which it sold out of.
Stocks Bought in Q3
Exact Sciences Corporation (NASDAQ:EXAS)
- Shares Bought During Q3: 1.16 million - Value of Holding (as of September 30): $91.82 million
- Q4 Return (through December 14): -13.44%
- Forward P/E Ratio: -56.45
JANA opened a new position in Exact Sciences Corporation (NASDAQ:EXAS) during the previous quarter, a period in which shares dove sharply in late-July before rebounding even stronger a month later after the company struck a partnership deal with Pfizer Inc. (NYSE:PFE) for its Cologuard cancer screening test. Cologuard revenue jumped by 63% in Q3 to $118 million.
Keurig Dr Pepper Inc. (NYSE:KDP)
- Shares Bought During Q3: 3.25 million - Value of Holding (as of September 30): $75.19 million
- Q4 Return (through December 14): +11.87%
- Forward P/E Ratio: 18.00
- Forward Dividend Yield: 2.31%
JANA took a new stake in Keurig Dr Pepper Inc. (NYSE:KDP) during Q3, the quarter in which the merger between Keurig Green Mountain and Dr Pepper Snapple Group was completed. Insiders were also buying the beverage company's shares in Q3, and that insider buying has persisted into Q4, with dozens of purchases being made by some of the company's leading executives, including Chief Corp. Affairs Officer Maria Sceppaguercio-Gever.
Falcon Minerals Corporation (NASDAQ:FLMN)
- Shares Bought During Q3: 1.92 million - Value of Holding (as of September 30): $26.67 million
- Q4 Return (through December 14): -33.18%
- Forward P/E Ratio: 7.74
- Forward Dividend Yield: 5.17%
JANA owned 4.59 million shares of Falcon Minerals Corporation (NASDAQ:FLMN) on September 30, which has since been reduced to 3.99 million as of October 31). The company changed its name from Osprey Energy Acquisition Corp. during the third quarter following its acquisition of Royal Resources LP. JANA had owned 2.5 million shares of Osprey on June 30.
VanEck Vectors Gold Miners ETF (NYSEARCA:GDX)
- Shares Bought During Q3: 809,052 - Value of Holding (as of September 30): $18.32 million
- Q4 Return (through December 14): +8.64%
- Forward Dividend Yield: 1.15%
JANA was bullish on gold stocks in Q3, raising its long position in the VanEck Vectors Gold Miners ETF (NYSEARCA:GDX) by 449% while also hiking its call position in the ETF by 568%. Those moves have paid off thus far in Q4, as the market turmoil has caused a predictable rebound in gold prices and stocks in Q4. The ETF contains 49 holdings, with Newmont Mining Corp (NYSE:NEM) and Barrick Gold Corp (USA) (NYSE:ABX), which top the list of the 13 Biggest Gold Mining Companies in the World, also topping the ETF in combined weighting, at just under 20%.
Stocks Sold in Q3
Facebook, Inc. (NASDAQ:FB)
- Shares Sold During Q3: 651,493 - Value of Holding (as of September 30): $0
- Q4 Return (through December 14): -12.40%
- Forward P/E Ratio: 19.34
JANA decided to unfriend Facebook, Inc. (NASDAQ:FB) in Q3, selling off the $127 million position it had just opened during Q2. It was one of several hedge funds to dump Facebook in Q3, as the social media giant lost its perch atop the list of the 30 Most Popular Stocks Among Hedge Funds, being overtaken by Microsoft Corporation (NASDAQ:MSFT).