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James Li
James Li
Articles (1538) 

Jana Partners' Top 4 Trades of the 4th Quarter

Event-driven investment firm releases quarterly portfolio

Jana Partners (Trades, Portfolio), a New York-based investment firm, disclosed last week that its top four trades during the fourth quarter of 2020 featured new holdings in Laboratory Corp of America Holdings (NYSE:LH) and Treehouse Foods Inc. (NYSE:THS), a position boost in Encompass Health Corp. (NYSE:EHC) and the closure of its position in Calloway Golf Co. (NYSE:ELY).

Barry Rosenstein founded Jana in 2001, establishing the firm as an event-driven investment vehicle that seeks long-term capital in undervalued stocks in which a catalyst event unlocks value for shareholders. Jana invests in both long and short positions and sometimes also actively engages with company management.

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As of December 2020, the activist firm's $1.48 billion equity portfolio contains 11 stocks, with four new positions and a turnover ratio of 29%. The top three sectors in terms of weight are consumer defensive, technology and health care, representing 32.50%, 26.49% and 25.70% of the equity portfolio.

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Laboratory Corp of America

Jana purchased 811,661 shares of Laboratory Corp of America (NYSE:LH), allocating 11.18% of its equity portfolio to the position. Shares averaged $201.28 during the fourth quarter; the stock is fairly valued based on Thursday's price-to-GF Value ratio of 1.08.

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GuruFocus ranks the Burlington, North Carolina-based medical diagnostics and research company's profitability 9 out of 10 on several positive investing signs, which include a high Piotroski F-score of 8, a four-star business predictability rank and an operating margin that is near a 10-year high of 21.09% and outperforms over 82.17% of global competitors.

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The Vanguard Health Care Fund (Trades, Portfolio) and John Rogers (Trades, Portfolio)' Ariel Investment also have holdings in Laboratory Corp of America.

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Treehouse Foods

Jana purchased 2,034,109 shares of Treehouse Foods (NYSE:THS), giving the position 5.85% equity portfolio weight. Shares averaged $40.66 during the fourth quarter; the stock is fairly valued based on Thursday's price-to-GF Value of 1.10.

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GuruFocus ranks the Oak Brook, Illinois-based packaged food manufacturer's financial strength 4 out of 10 on the back of interest coverage and debt ratios underperforming over 80% of global competitors, suggesting high financial leverage.

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Encompass Health

Having purchased 1,741,513 shares of Encompass Health (NYSE:EHC) during the third quarter of 2020, the firm added 851,601 shares during the fourth quarter, boosting the position 48.90% and the equity portfolio 4.77%. Shares averaged $74.08 during the fourth quarter.

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GuruFocus ranks the Birmingham, Alabama-based health care provider's profitability 8 out of 10 on several positive investing signs, which include a four-star business predictability rank and an operating margin that is outperforming over 80% of global competitors.

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Callaway Golf

Jana sold 2,943,183 shares of Callaway Golf (NYSE:ELY), knocking off 5.04% of the equity portfolio. Shares averaged $20.41 during the fourth quarter; based on GuruFocus estimates, the firm gained approximately 13.98% on the stock since initially buying shares during the second quarter of 2019.

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GuruFocus ranks the Carlsbad, California-based golf club manufacturer's profitability 6 out of 10: Although the company's operating margin outperforms over 65% of global competitors, returns are underperforming more than 70% of global travel and leisure companies.

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See also

Jana reported that it dissolved its HD Supply Holdings Inc. (NASDAQ:HDS) position, impacting its equity portfolio by -4.21%. The Home Depot Inc. (NYSE:HD) acquired the Atlanta-based industrial distribution company on Dec. 24.

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Disclosure: No positions.

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