In a move that most investment firms would love to have, Jana partners raked in profits from its investment with Barnes & Noble, Inc. (NYSE: BKS), in a one day sale.
Jana partners on Monday sold around 1 million shares at $24.42 each on the same day that Microsoft made an investment of $605 million, sending stock prices soaring to unprecedented highs. This new sale was made less than a fortnight after the hedge fund headed by Barry Rosenstein bought in a 12% stake in the bookseller. John Kell writing in the Wall Street Journal was the first one to note the sale.
On Monday, Jana sold one million shares at $24.42 each, the same day Microsoft Corporation (NASDAQ:MSFT)’s $605 million investment sent the book seller’s shares up nearly 50%. The hedge fund’s 12% stake has almost 7 million shares, and they were acquired when stock prices were a mere $12 a piece. It is assumed that Jana may have unloaded more shares that were filed, and it only remains to see whether they will be revealed in due time. However, stock for Barnes & Noble, Inc. (NYSE:BKS) is also seen as heading to the good times, because at the end of the month of April, it traded around 29.5 million shares, and it also reached a high of $26 per share, and it closed at $20.75.
Therefore, the windfall that Jana Partners has had is seen as the true investors dream come true, because the shares were held in the hopes that the share price would increase so that a killing would be made, when and if the price would have gone up.
But John Malone’s Liberty Media Corporation (NASDAQ: LMCA) is seen as the real winner, in Barnes & Noble fairy tale because it has a huge stake in the company. Liberty Media has preferred stock worth $204 million, which translated to around 12 million shares, or around 16.6% of the Barnes & Noble.
In fact, initially, Liberty Media had wanted to buy all of the firm’s stock for 1 billion having by enticed by firm’s Nook electronic reader. But in a revised deal, it got a stake in the company, and shares it has are paid an annual dividend of around 7.75%.
However, the timing with which the company was able to make a killing on may raise eyebrows of the Securities and Exchange Commission, and analysts are of the opinion that the commission may be looking to see if the hedge fund benefited from insider information.
Barnes & Noble will be pleased with this latest development since it has been facing major competition from discounters like Wal-Mart stores, and retailers online like Amazon. In fact, at one point the book maker had been facing a lot of pressure from Ron Burkle, the millionaire activist investor to sell itself, after one of its major competitors; Borders Group went out of business.
But a shocker that most analysts are keen on is that Jana only unloaded a seventh of its stake in Barnes & Noble, while it could have made much more had it sold its entire stake in the book maker.