In the wake of a profitable sale of Whole Foods, where Jana Partners LLC was reported to have made a $320 million profit, or a 40% return on its initial investment, it was the hedge fund’s short exposure that delivered performance in August, according to a letter to investors reviewed by ValueWalk.


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Jana Partners LLC

Top five long exposures drag on Jana Partners LLC performance as short exposure positive

The Long / Short activist hedge fund witnessed short exposure generate 0.7% performance on the month, while longs subtracted 0.1%. The drag on performance could be seen in the $2.26 billion Jana Partners LLC 's largest holdings, with four of the five largest holdings suffering losses on the month, including Zimmer Biomet Holdings, Tiffany and EQT.

Jana Partners Managing Partner Barry Rosenstein engaged Zimmer Biomet in an activist position, encouraging management changes, which occurred. The strategy didn’t perform positively in August, however, with the stock down over 5% on the month.

EQT is another top Jana holding that was down less than 1% on the month. Jana has been arguing the firm should not proceed with its acquisition of Rice Energy, calling it “value-destructive,” one that would enrich EQT management based on production incentives in their contract.

“It is clearer than ever that EQT shareholders should reject the proposed Rice acquisition, unless of course EQT management is willing to forsake the millions in additional compensation,” Jana Partners LLC said in a July letter to investors.

Rounding out the top five long positions, which represent 34% of the portfolio, the fund also lost money on Tiffany and Universal Health Services while winning on their Liberty Broadband exposure.

Jana Partners LLC largely long Healthcare and Information Technology

Jana took a reported 600,000 share stake in grocery home delivery service Blue Apron as of June 30. The fund is negatively positioned in Consumer Staples, 3.5% long and 7.1% short, while positively positioned with a net 13.5% long exposure to Information Technology. Consumer discretionary represents the largest long exposure at 24.7% but also the largest short exposure at 13.0%.

On a net basis, the fund is longest Health Care by 14.6% followed by Information Technology at 13.5%. Technology stocks have been a major trade for hedge funds, with Jana Partners LLC joining one of the years best performing sectors.

By market cap, the largest net weighting is a 50.2% exposure to stocks $5 billion to $25 billion, by far the largest exposure. Stocks with a market cap from $1 billion to $5 billion, the next highest exposure, accounting for 8.9% net long exposure. Large cap stocks, over $50 billion in market cap, represent just 1.1% of long exposure.