Barry Rosenstein is putting his money in Japan Airlines Co Ltd (TYO:9201) and Oil States International, Inc. (NYSE:OIS), Kelly Bit reports for Bloomberg. Jana Partners sold all its gold assets in February, says the firm in a letter to investors, saving itself from steep losses when gold plummeted in April and hit investors like John Paulson, David Einhorn and Paul Singer. Another hedge fund manager who has closed his investment in gold is Dan Loeb, his fund Third Point exited the precious metal when it was at $1450 in second quarter.
Jana also sold out of Coca-Cola Enterprises Inc (NYSE:CCE) and Rockwood Holdings, Inc. (NYSE:ROC) in the last quarter. Rosenstein’s returns were hurt in June in two of his major funds.
Barry Rosenstein bullish on Japan Airlines
Rosenstein’s investment comes at a time when Japan Airlines has been struggling to report decent profits amid rising fuel prices. The Japanese carrier came back on the market last year after going through a tough bankruptcy. In its April-June quarter earnings, Japan Airlines Co Ltd (TYO:9201) reported a decline of 31.9 percent in profits which dropped to $187 million, whereas revenue was up 2.6 percent on-year.
The $6 billion hedge fund intimated its new position in Japan Airlines to investors in their latest letter. Rosenstein said that the company could get a boost from increased air travel trends, a new dividend and better earnings. At least one of Jana’s expectations for Japan Airlines is not doing so well as the carrier reported declining profits in last quarter. Jana also said that with better growth, Japan Airlines Co Ltd (TYO:9201) can expect to be included in the Nikkei 225 list. Rosenstein said in his letter that he expected JAL to get a boost from increased air travel as the health of Japan’s economy and consumer improves.
Tough quarter for Japan’s airline industry
While Rosenstein has high hopes for the carrier, the major airlines of Japan have reported plunging profits which they have attributed to higher fuel costs due to stronger dollar. Throughout the year Abe-led government has infused trillions of yen in Japanese market to break the continued cycle of deflation. As a result, yen has plummeted against USD and is down -12 percent for the year. While a weakening yen has boosted Japan’s exporters, industrials and auto makers, it seems to have put carriers in a difficult spot. Competitor of Japan Airlines, ANA Holdings Inc (TYO:9202) reported a loss of ¥6.6 billion or $67 million in last fiscal quarter, compared to a profit of ¥668 million over the last year. ANA’s losses were partly attributable to the four month long grounding of Boeing Dreamliners due to technical faults in the airplanes. This led to the cancellation of hundreds of flights. Both JAL and ANA will seek compensation from The Boeing Company (NYSE:BA) for the loss of ¥22.5 billion in revenue.
Jana buys Oil States International
Another company that caught the eye of Jana Partners was Oil States International, Inc. (NYSE:OIS), Rosenstein thinks that the company is worth $140/share. Oil States International, Inc. (NYSE:OIS) provides services to oil and gas explorers. Jana initiated the position in April. OIS is also a long position of another notable hedge fund manager, the company is among the top five holdings of David Einhorn’s Greenlight Capital. Greenlight was up 2.6 percent in July, thanks in part to the +11 percent increase in OIS shares during the month.
For more news on hedge funds, follow Tabinda Hussain @tabihussain