You’ve no doubt heard the news by now, Jana Partners has made a big bet on Qualcomm. Reportedly, owning over $2 billion in stock, which is still less 2% of the company. Assuming this is true, this is Jana’s biggest bets ever.  Qualcomm would make up some 19% of the fund’s portfolio.

Notice from the table above that Qualcomm overtakes Walgreens as Jana’s largest holding:

Qualcomm

The basic idea is to split the company up, forming two separate businesses — a chip making business and a patent licensing player. We saw similar calls for Broadcom to spin out its cellular parts business back in 2013 to no avail. However, no activist got involved there.

The other things Jana wants is a more aggressive share buyback and costs cuts. Recall that Qualcomm did announce a $15 billion buyback just last month. Jana and Qualcomm have been in talks since the beginning of the year. No doubt, Qualcomm has been a laggard (compared to the market), but it’s still holding its own versus other chip makers.

The thesis is a classic, break up the company up and they’ll get higher trading multiples. Even last month there was talk that the chip making segment was being valued at $0 because it was being overshadowed by Qualcomm’s IP business. The true value? Rumored to be $80 billion. Couple that with the expected value of its IP business, also rumored to be worth $80 million, and you have a $160 billion company trading at a $116 billion market cap…