Jana Partners LLC, the activist hedge fund headed by Barry Rosenstein, reduced its stockholdings in Agrium Inc (NYSE:AGU) (TSE:AGU) from 7.6 percent to 2.7 percent based on its latest regulatory filing with the Securities and Exchange Commission (SEC).

Barry-Rosenstein Jana Partners

Jana Partners’ Agrium stakes reduction

The activist hedge fund explained that the decision to cut its position in the fertilizer giant was “in the course of managing its overall portfolio.” Jana Partners reiterated its position that Agrium Inc. (NYSE:AGU) (TSE:AGU) has opportunities for substantial improvements and indicated that it is pleased with the progress of the company.

Jana Partners noted that the fertilizer giant continues to increase its capital returns to shareholders substantially, and management introduced and incorporated a new metrics regarding the profitability of the Retail Business including ROIC, costs, and working capital levels to determine their compensation.

Expectations for Agrium

In addition, the activist hedge fund expects that Agrium Inc. (NYSE:AGU) (TSE:AGU)’s management changes and scheduled retirement of some of the members of its board will lead to the improvement of openness and responsiveness to proposals for value creation. Jana Partners also expect the company to renounce some of the tactics it used related to the 2013 annual general meeting, such as the undisclosed compensation for brokers and financial advisers that solicited votes for incumbent board members.

Furthermore, Jana Partners believes that the newly increased dividend should help investors better appreciate the steady cash flow production of the Retail business of Agrium Inc (NYSE:AGU) (TSE:AGU). The hedge fund also maintained its conviction that an unbiased review of the company’s structure would be beneficial to all shareholders.

Jana Partners to continue investments and discussions

Moreover, Jana Partners said it may continue to hold an investment in the shares of Agrium Inc. (NYSE:AGU) (TSE:AGU) and continue its discussions with the board and management, as well as shareholders of the company regarding costs, controls, capital allocation, conglomerate structure and corporate governance.

Jana Partners launched a proxy fight against Agrium Inc. (NYSE:AGU) (TSE:AGU) early this year and demanded changes in the board of the company, citing that its non-management board directors do not have relevant distribution experience, which caused the underperformance of its stock price. The hedge fund lost its battle after shareholders re-elected the 12 incumbent directors nominated by the company.

Last month, the Agrium Inc. (NYSE:AGU) (TSE:AGU) raised its dividend by $1.00 to $3.00 per share annually, or $0.74 per share on a quarterly basis, which represents a dividend yield of 3.3 percent. The company recently announced that its COO Chuck Magro was appointed CEO to replace Mike Wilson, who will be retiring from his position.