Jana Partners Trims Stakes in Rackspace, Time Warner, Hertz

Event-driven firm makes adjustments to holdings

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Jan 13, 2016
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Jana Partners, an investment manager specializing in event-driven investing, reduced several stakes in the third quarter.

It reduced its stake in Rackspace Hosting Inc. (RAX) by 83.50% with an impact of -2.03% on the portfolio. It now holds 1.35% of the company's outstanding shares, and the stake has a 0.51% weighting in the portfolio.

GuruFocus gives Rackspace Hosting a profitability and growth rating of 7 out of 10 with easy returns of ROE 11.42% and ROA 7.60% that are underperforming 66% of the companies in the Global Information Technology Services industry. Financial strength has a rating of 9 out of 10 with a cash-to-debt of 0.61 that is slightly below the industry median of 0.71.

The company, through its operating subsidiaries, is a provider of cloud computing services, managing web-based IT systems for small and medium-sized businesses as well as large enterprises. In the third quarter, revenue grew by 11% compared to the second quarter of 2014.

The company’s second-largest shareholder among the gurus is Jim Simons (Trades, Portfolio) with 0.94% of outstanding shares, followed by Paul Tudor Jones (Trades, Portfolio) with 0.06% and John Hussman (Trades, Portfolio) with 0.04%.

The fund reduced its stake in Lions Gate Entertainment Corp. (LGF) by 28.26% with an impact of -0.62% on the portfolio. The fund currently holds 4.83% of the company's outstanding shares, and the stake has a 2.98% weighting in the portfolio.

GuruFocus gives Lions Gate Entertainment a profitability and growth rating of 6 out of 10 with easy returns of ROE 14.89% and ROA 3.52% that are outperforming 57% of the companies in the Global Media - Diversified industry. Financial strength has a rating of 8 out of 10 with a positive cash-to-debt of 0.11 that is far below the industry median of 1.19.

Lions Gate is an entertainment company with its presence in motion picture production and distribution, television programming and syndication, home entertainment, family entertainment, digital distribution, new channel platforms and international distribution and sales. During the third quarter, strong financial results were driven by growing margins across businesses in which adjusted net income had an increase of 6% from the same quarter of a year before.

George Soros (Trades, Portfolio) is the company's second-largest shareholder among the gurus behind Jana Partners, with 0.81% of outstanding shares, followed by Caxton Associates (Trades, Portfolio) with 0.27% and Julian Robertson (Trades, Portfolio) with 0.04%.

The investor reduced its stake in Golar LNG Ltd. (GLNG) by 76.47% with an impact of -0.56% on the portfolio. The current stake is 0.19% of its total assets and 0.69% of the company’s outstanding shares.

GuruFocus gives Golar LNG a profitability and growth rating of 3 out of 10 with negative returns of ROE 7.49% and ROA 4.14% that are underperforming 87% of the companies in the Global Shipping & Ports industry. Financial strength has a rating of 6 out of 10 with a cash-to-debt of 0.12 that is below the industry median of 0.34.

The company is engaged in the acquisition, ownership, operation and chartering of LNG carriers and FSRUs through its subsidiaries and affiliates and the development of LNG projects.

The company's largest shareholder among the gurus is James Barrow (Trades, Portfolio) with 5.42% of outstanding shares, followed by John Burbank (Trades, Portfolio) with 1.03%, Jana Partners (Trades, Portfolio) with 0.69% and Jim Simons (Trades, Portfolio) with 0.63%.

The firm reduced its stake in Starz (STRZA) by 26.82% with an impact of -0.54% on the portfolio. It now holds 5.46% of the company's outstanding shares, and the stake has a 2.34% weighting in the portfolio.

GuruFocus gives Starz a profitability and growth rating of 8 out of 10 with strong returns of ROE 220.57% and ROA 17.88% that are outperforming 100% of the companies in the Global Media - Diversified industry. Financial strength has a rating of 7 out of 10 with a cash-to-debt of 0.02 that is far below the industry median of 1.19.

The company, through its subsidiaries, operates as a media and entertainment company. The company was formerly known as Starz LLC and changed its name to Starz Inc. in January 2013.

Murray Stahl (Trades, Portfolio) is the company's largest shareholder among the gurus, with 6.03% of outstanding shares, then Columbia Wanger (Trades, Portfolio) with 1.03% and John Keeley (Trades, Portfolio) with 0.37%.

It reduced its stake in Time Warner Inc. (TWX) by 14.12% with an impact of -0.34% on the portfolio.

The fund currently holds 0.50% of the company's outstanding shares, and the stake has a 3.11% weighting in the portfolio.

GuruFocus gives Time Warner a profitability and growth rating of 7 out of 10 with strong returns of ROE 15.18% and ROA 5.87% that are underperforming 71% of the companies in the Global Media - Diversified industry. Financial strength has a rating of 6 out of 10 with a cash-to-debt of 0.08 that is below the industry median of 1.19.

The company is a media and entertainment company. It operates its business in four segments which include Turner, Home Box Office, Warner Bros. and Time Inc. (TIME, Financial). Turner consists of cable networks and digital media properties. During the third quarter, revenue grew 10.7% compared to the third quarter of 2014 and adjusted EBITDA had growth of 11.9%.

The company's largest shareholder among the gurus is Dodge & Cox with 4.72% of outstanding shares, followed by Manning & Napier Advisors with 0.85% and David Einhorn (Trades, Portfolio) with 0.48%.

The fund reduced its stake in Hertz Global Holdings Inc. (HTZ) by 6.55% with an impact of -0.3% on the portfolio. The current stake is 7.39% of the fund's total assets and 8.82% of the company’s outstanding shares.

GuruFocus gives Hertz Global Holdings a profitability and growth rating of 6 out of 10 with negative returns of ROE 1.62% and ROA 0.16% that are outperforming in the Global Rental & Leasing Services industry. Financial strength has a rating of 7 out of 10 with a cash-to-debt of 0.03 that is far below the industry median of 0.66.

The company is engaged in car and truck rental and leasing and the equipment rental business. In the third quarter, gross profit amounted to 11.6% of revenues compared to 2.5% of revenues in the second quarter of 2015. The company reported several positive gains on its other income line in the quarter. The largest of these gains is a $3.77 million reversal of a previous accrued legal settlement.

Carl Icahn (Trades, Portfolio) is the company's largest shareholder among the gurus with 11.68% of outstanding shares, then Larry Robbins (Trades, Portfolio) with 5.68% and Columbia Wanger (Trades, Portfolio) with 1.13%.

The investor reduced its stake in Computer Sciences Corp. (CSC) by 8.78% with an impact of -0.28% on the portfolio. It now holds 5.28% of the company's outstanding shares, and the stake has a 5.07% weighting in the portfolio.

GuruFocus gives Computer Sciences a profitability and growth rating of 4 out of 10 with weak returns of ROE 0.69% and ROA 0.21% that are underperforming 68% of the companies in the Application Software - Information Technology Services industry. Financial strength has a rating of 7 out of 10 with a cash-to-debt of 0.70 that is below the industry median of 7.12.

The company provides information technology and professional services and solutions. The company has helped its clients develop and integrate their IT assets in support of operational efficiency, new growth initiatives and other business objectives.

The company’s second-largest shareholder among the gurus is T Rowe Price Equity Income Fund (Trades, Portfolio), which holds 0.98% of the company's outstanding shares, followed by Joel Greenblatt (Trades, Portfolio) with 0.92% and Jim Simons (Trades, Portfolio) with 0.58%.

The firm reduced its stake in Qualcomm Inc. (QCOM) by 0.93% with an impact of -0.1% on the portfolio. The fund currently holds 1.90% of the company's outstanding shares, and the stake has a 17.29% weighting in the portfolio.

GuruFocus gives Qualcomm a profitability and growth rating of 8 out of 10 with strong returns of ROE 14.60% and ROA 10.66% that are outperforming 81% of the companies in the Global Communication Equipment industry. Financial strength has a rating of 8 out of 10 with a positive cash-to-debt of 1.58 that is far below the industry median of 1.96.

The company develops and commercializes digital communication technology called CDMA (Code Division Multiple Access) and owns intellectual property applicable to products that implement any version of CDMA including patents, patent applications and trade secrets.

James Barrow (Trades, Portfolio) is the company's second-largest shareholder among the gurus with 1.23% of outstanding shares, followed by PRIMECAP Management (Trades, Portfolio) with 1.08% and Jeremy Grantham (Trades, Portfolio) with 0.65%.