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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.


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.


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.


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.


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


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.


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.


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.


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.


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.


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.


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.


Disclosure: No positions.

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