Shares of Bloomin’ Brands (BLMN, Financial) have soared 10% since Barry Rosenstein’s value-oriented firm Jana Partners (Trades, Portfolio) LLC disclosed an activist stake in the company on Friday after exiting a similarly sized position a little more than a year ago.
New York-based Jana acquired 7,819,899 shares of Bloomin’ Brands, giving it a 9.0% stake, from July 9 through Aug. 30, according to a filing. The firm paid about $16.24 per share on average for the owner of Outback Steakhouse and Carrabba’s Italian Grill, spending $127.7 million in aggregate. In the filing, Jana, which examines business fundamentals to identify mispriced stocks, called the shares “undervalued” and said they “represent an attractive investment opportunity.”
The stock closed Tuesday at $18.13 per share, its highest since early July. Bloomin’ Brands had declined 7.9% for the year through the day before Jana announced its intents.
Jana said it may attempt to influence the board to sell the company, divest some parts or change its financial operations or board membership.
Bloomin’ Brands was previously in Jana’s portfolio as recently as the second quarter of 2018. It unloaded 7,819,899 shares of the company when the price averaged around $23, after starting an activist campaign in the second half of 2017 when the price averaged around $18 and $19.
During its past involvement with Bloomin’ Brands, Jana pushed for changes such as adding an independent director to its board and exploring a sale. The event-driven firm has shaken up a host of prominent companies since its founding in 2001, including McDonald’s (MCD, Financial), Apple (AAPL, Financial) and Callaway Golf (ELY, Financial). It was also in discussions with Whole Foods Market when the company agreed to be acquired by Amazon (AMZN, Financial).
News of Jana’s involvement tends to send companies up, with Callaway jumping 14.4% and Bloomin’ Brands 12.4% on the day it announced an activist stake.
In the second quarter, Bloomin’ Brands fell short of revenue expectations, posting $1.02 billion versus analysts’ estimates of $1.04 billion. Net income for the quarter totaled $2 million, or 36 cents per share adjusted for impairment charges, beating expectations of 35 cents.
Across its restaurants, same-store sales increased 1.3% at Outback Steakhouse, 0.1% at Bonefish Grill and 1.6% at Fleming’s Prime Steakhouse & Wine Bar. Same-store sales decreased 1.6% at Carrabba’s Italian Grill, and inched up 0.6% on average for all its U.S. restaurants.
Bloomin’ Brands’ price-earnings ratio at 13.52 and price-sales ratio at 0.35 are near their respective 10-year lows.
Jana Partners (Trades, Portfolio)’ reported equity portfolio was valued around $1.2 billion with 10 stocks listed at the end of the second quarter.
See Jana Partners (Trades, Portfolio)’ portfolio here.
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