New York-based Jana Partners (Trades, Portfolio) invests in securities using a value-oriented, event-driven approach. On Thursday, the activist hedge fund disclosed that it expanded its Pinnacle Foods Inc. (PF, Financial) position 661.61% on April 9.
Trade details
Jana invested in 9,405,657 shares for $54.62 per share, increasing its position to 10,827,278 shares, or 9.10% of total shares outstanding. With this transaction, the hedge fund expanded its portfolio 11.95%.
Jana disclosed in its Schedule 13D filing that it intends to discuss with Pinnacle’s management and board of directors regarding key valuation creation measures, which include margin execution, capital allocation and strategic value realization.
Company background
Pinnacle Foods manufactures and distributes branded food products across North America. The company operates in four business segments: Frozen, Grocery, Boulder and Specialty. Top brands include Birds Eye, Hungry-Man, Duncan Hines and Wish-Bone.
On March 1, CEO Mark Clouse said that Pinnacle delivered “another year of exceptional in-market performance, with retail consumption and market share advancing for the sixth consecutive year.” Pinnacle reported net sales of $3.14 billion during 2017, up approximately $10 million from the prior year. Adjusted earnings were $2.55 per share, up 40 cents from prior-year adjusted earnings.
GuruFocus ranks Pinnacle’s profitability 6 out of 10 primarily due to a three-year EBITDA growth rate of -1.40%, which underperforms 69% of global competitors. Despite decelerating revenues over the past 12 months, Pinnacle still has strong margins and returns. The company’s operating margin is near a 10-year high of 16.31%, and Pinnacle’s return on equity is near a 10-year high of 26.08%. Both metrics outperform over 80% of global competitors.
Pinnacle traded around $60.92 at market open, approximately 10.36% higher than the previous close of $55.20.
See also
According to GuruFocus real-time picks, Jana made a second trade on April 9. The fund sold 1,945,672 shares of Bloomin Brands Inc. (BLMN, Financial), reducing the position 24.54%.
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Disclosure: No positions.
