JANA's Barry Rosenstein: Presentation on Agrium (Value Investing Congress) ~ market folly

Monday, October 1, 2012

JANA's Barry Rosenstein: Presentation on Agrium (Value Investing Congress)

Today and tomorrow we're posting up in-depth notes from the Value Investing Congress.  Here's the presentation from Barry Rosenstein of JANA Partners.  His talk was entitled 'JANA Partners' Activist Approach and a Current Idea.'

JANA Pushes For Agrium (AGU) Split

At the SALT Conference earlier this year, Rosenstein said that today is the best environment for activism he's seen.  His activist investment firm has targeted AGU and they're pushing for the company to split up its fertilizer and retail units (50% upside if they do so).  JANA's main complaint is that the company has excess overhead and costs.

They've posted an analysis of the company at JANAAGUAnalysis.com and we've embedded the presentation below entitled 'Unlocking Agrium's True Value Potential.'

On the website, JANA writes,

"JANA believes that for years Agrium’s full value creation potential has been buried by the company’s conglomerate structure and burdened by operational missteps in its retail distribution business.  As a result, Agrium trades at a significant discount to its true value and has consistently underperformed the weighted average of its peers in total shareholder return over the long term. Agrium has also underperformed its true earnings potential due to factors including a failure to manage costs, poor capital allocation and poor disclosure. In our analysis, we have outlined concrete steps Agrium can take to address this underperformance for shareholders.  We have shared this analysis with Agrium’s board of directors and management."

Embedded below is JANA's presentation on AGU:

Additionally, here's a list of frequently asked questions that JANA's answered in a prepared document answering questions on AGU operations, valuation, and more:

Question & Answer

What is motivating management?  "I'd be out of a job if every company was doing what they were supposed to be doing."

For other activity from this hedge fund, we recently detailed how JANA sold its Barnes & Noble stake.

Be sure to check out the rest of the hedge fund presentations from the Value Investing Congress.

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