JANA Partners Exits Ashland Shares

Barry Rosenstein's activist hedge fund JANA Partners has filed an amended 13D with the SEC regarding its position in Ashland (ASH).  Per the filing, JANA no longer owns a stake in the company.

The filing was made due to activity on May 11th, 2015.  JANA previously owned over 5.8 million shares of ASH. 

The 13D notes that, JANA "has disposed of its investment in the Shares of the Issuer through regular portfolio management activities. The Reporting Person is highly supportive of the steps taken by the Issuer’s board and management in recent years, including the simplification of the Issuer’s business structure with the disposal of its Water Technologies business, substantial share repurchases, improved margins, and the addition of a board member with significant industry experience."

For more from this hedge fund, head to Rosenstein's presentation at the recent Sohn conference.

Per Google Finance, "a specialty chemical company that provides products, services and solutions to industries. The Company’s segments are: Ashland Specialty Ingredients offers products, technologies and resources in key markets including personal and home care, pharmaceutical, food and beverage, coatings, construction, energy and other industries; Ashland Water Technologies is a supplier of specialty chemicals and services to the pulp, paper, mining, food and beverage, power generation, refining, chemical processing, general manufacturing and municipal markets."

JANA Partners Goes Activist on Safeway, Increases Ashland Stake

Catching up on some important news while we were busy with conferences: Barry Rosenstein's activist hedge fund JANA Partners has recently filed a 13D on Safeway (SWY) as well as an amended 13D on Ashland (ASH).


JANA's Activist Investment in Safeway (SWY)

They've filed a new 13D on grocery store chain Safeway (SWY).  They previously owned a tiny position but have recently ramped up their stake and now own 6.2% of the company with 14,950,000 shares.

This marks a 1,114% increase in their position size since the end of the second quarter.  The filing was required due to portfolio activity on September 13th.

The activist filing indicates that JANA has already had discussions with management and specifically mentions their desire to review the markets where the company operates and to exit "subscale and lower margin geographies."  JANA also is looking to return more capital to shareholders and to potentially transfer the company's Blackhawk Network stake to shareholders.

The hedge fund was actively buying shares in July and then ramped up purchases in August, buying around $25 and $26 and as high as $28 in September.

Per Google Finance, Safeway is "a food and drug retailer in North America.  The Company’s United States retail operations are located principally in California, Hawaii, Oregon, Washington, Alaska, Colorado, Arizona, Texas, the Chicago metropolitan area and the Mid-Atlantic region. Safeway’s Canadian retail operations are located principally in British Columbia, Alberta and Manitoba/Saskatchewan. In support of its retail operations, the Company has a network of distribution, manufacturing and food-processing facilities. Safeway owns and operates GroceryWorks.com Operating Company, LLC (GroceryWorks), an online grocery channel doing business under the names Safeway.com and Vons.com (collectively Safeway.com). Safeway also has a 49% interest in Casa Ley, S.A. de C.V. (Casa Ley), which operates 195 food and general merchandise stores in Western Mexico."


JANA Increases Ashland (ASH) Stake

According to an amended 13D filed with the SEC, the hedge fund also has increased its position in Ashland (ASH).  Per the filing, JANA now owns 8.4% of the company with 6,503,180 shares.

This marks a 13% increase in their position size since the end of the second quarter.  The filing was required due to portfolio activity on September 18th.  The bulk of their buying looks to have been done in late August and early September at prices ranging from around $87 to $92.

Just recently, we highlighted that the winner of the Value Investing Challenge was a pitch on Ashland, so you can check out the potential thesis there.

We highlighted JANA's original purchase of ASH shares back in February/April.

Per Google Finance, Ashland is "a global specialty chemical company that provides products, services and solutions throughout a variety of industries. Ashland’s business operates in four segments: Ashland Specialty Ingredients; Ashland Water Technologies; Ashland Performance Materials and Ashland Consumer Markets."


For more on this hedge fund, head to an in-depth interview with JANA Partners here.

Value Investing Congress Notes: New York 2013

Below are notes from the 2013 Value Investing Congress in New York from both days.  Click the links below for each speaker's presentation:


Value Investing Congress Notes: Both Days


Jeff Ubben (ValueAct): Long Willis Group (WSH)

Jeffrey Smith (Starboard Value): Long Wausau Paper (WPP)

Mick McGuire (Marcato): Long United Rentals (URI)

Cameron & Tyler Winklevoss (Winklevoss Capital): On Bitcoin

Donald Yacktman (Yacktman Funds):  Process & market thoughts 

Alex Roepers (Atlantic Investment Management): His 5 new ideas 

Guy Gottfried (Rational Investment Group): 2 Canadian longs

Michael Castor (Sio Capital): Various healthcare plays

John Mirshekari (Fidelity Investments): 2 investment ideas

Chris Mittleman (Mittleman Brothers): Azteca, CMIC Holdings

Clifton Robbins (Blue Harbour Group): Chico's (CHS)

Mark Boyar (Boyar Value Group):  Long Madison Square Garden (MSG)

Joe Altman & Chris Kyriopoulos (COMPOUND): Long Ascent & Covanta

Harvey Sawikin (Firebird Management): Long Gazprom Neft

Rahul Saraogi (Atyant Capital): On India

Charles de Vaulx (IVA): Market thoughts

Whitney Tilson (Kase Capital): Short K12 (LRN)

Daniel Miller (Gabelli Focus Five): 3 ideas 

Evan Vanderveer & David Shapiro (Vanshap Capital): 2 investment ideas

Carl Chen & Tom Lu (Temple Honor Asia): 2 stock picks

Chris Mayer (Capital & Crisis): Various bank picks

Value Investing Challenge Winner: Long Ashland (ASH)

Value Investing Challenge Runner-Up: Short Life Lock (LOCK)

Value Investing Challenge Winner: Long Ashland (ASH)

We're posting up notes from the 2013 Value Investing Congress in New York.  Next up is the Value Investing Challenge winner.  Daniel Lawrence of Elmrox Investment Group pitched Ashland (ASH) as a long.


Daniel Lawrence's Value Investing Congress Presentation

Long Ashland (ASH)

Specialty chemical company.

"Misunderstood transformation with significant upside and catalysts."

Used to be commodity chemicals company, and is now a specialty chemical company.  Street is not valuing it for that yet.  Says stock doubles from here.

Owns Valvoline- he says high barrier to entry, but low maintenance CAPEX, less than 2% of sales.

Product portfolio is differentiated, high loyalty rates by consumers.  Market giving no credit for Valvoline, effectively getting it "for free."

Says multiple expansion as market recognizes the transformation.

Why it's cheap?  Street thinks they will make more big acquisitions.  Oil exposure, weak cash flow, underfunded pension. 

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

JANA Partners Discloses Ashland (ASH) Stake

Barry Rosenstein's hedge fund firm JANA Partners has filed a 13D with the SEC regarding shares of Ashland (ASH).  Per the filing, JANA has revealed a 7.4% ownership stake in ASH with over 5.8 million shares.

This is a brand new position for the hedge fund.  However, they have owned the name in the past: back in 2010.  The latest filing was required due to portfolio activity on April 1st, though JANA was out buying ASH shares as early as February 12th and as recent as April 10th according to the filing, at prices ranging from $76.xx to $80.xx.  ASH shares currently trade around $84.


Breakdown of Options Position

In the fine print, we see that JANA's position includes 4,145 and 2,210 call options with strike prices of $65 and $70 that expire next week (April 19th).  They also own May expiration calls via 1,465 options with a strike of $60 and 1,445 options with a strike of $65.  Additionally, they've sold 2,270 April puts with a strike of $70 and they've also sold 1,445 May puts with a strike of $65.


Reason For Purchasing ASH Shares

As to why they purchased the stake, JANA reveals their intentions in the "purpose of transaction" section of the 13D filing:

"The Reporting Person acquired the Shares because it believes the Shares are undervalued and represent an attractive investment opportunity. The Reporting Person has had discussions with the Issuer’s management relating to, among other things, the Issuer’s business, corporate structure, capitalization, operations, stragetgy and future plans. The Reporting Person expects to continue to have such discussions with the Issuer’s management as well as with the Issuer’s board of directors, shareholders and other parties relating to such matters, and may take other steps seeking to bring about changes to increase shareholder value."

Per Google Finance, Ashland is "a global specialty chemical company that provides products, services and solutions throughout a variety of industries. Ashland’s business operates in four segments: Ashland Specialty Ingredients; Ashland Water Technologies; Ashland Performance Materials and Ashland Consumer Markets."

For more from this hedge fund,  be sure to check out Rosenstein's in-depth interview with Columbia Business School.

Alexander Roepers: Expects Increased M&A (Value Investing Congress Presentation)

At the Value Investing Congress today, Alexander Roepers of Atlantic Investment Management made the case for longs of Energizer Holdings (ENR), Ashland (ASH), Flowserve (FLS), MTU Aero Engines (MTX.GY), and Atos (ATO.FP) in a presentation entitled "Conducive Environment for Corporate Action, Activism & Takeovers".

Be sure to check out all of our notes from the Value Investing Congress.


Alexander Roepers (Atlantic Investment Management)

Embedded below is Roepers' full slideshow presentation:



His outlook is very positive for both stocks and especially takeovers/mergers.

1. Valuations attractive due to worst crash in 70 years. Record high equity risk premium

2. Balance sheets of corporations are strong

3. There are large cash pools for LBO out there

4. Low interest rates

5. Moderate organic growth in developed markets, so room for M&A

6. Cross border M&A activity heating up

7. If fear index falls below 25 (32 today) for 2-3 months, we will see increased M&A activity


What they look for: $1-10B, big enough to move the needle, small enough to get the deal done. Strategic franchises with high barriers to entry, <8x forward EBIT preferred, strong balance sheets, predictable & recurring cash flows, low insider ownership (<10% owned by management/family), noticeable activity in sector.


Investment Ideas:

Energizer Holdings (ENR): Batteries and personal care (razors). “A small Proctor and Gamble” good number two. Target is $102 in 12-18 months, based on 11x FY12E EBIT.

Ashland (ASH): Special chemical company. Trades at 5x EBIT, 7x P/E on FY2012 estimates. Target is $105 in 12-18 months at 10x EBIT.

Flowserve (FLS): Flow control products, pumps, valves, seals for pipeline and nuclear power industries. Trades at 5.7x EBIT on 2012 estimates, target is $135 in 12-18 months on 11x 2012E EBIT. Competitor just bought for 12x EBIT.

MTU Aero Engines (MTX.GY): German company. Military and commercial engines. Same thing, price target depends on multiple going from 7.8x EBIT to 11x EBIT

Atos (ATO.FP): French version of Accenture. IT and high tech consulting.



About Alexander Roepers: Manages $1.4 billion (part of which is long only). Has seen 19% compounded returns.


You can view our notes from the Value Investing Congress for the rest of the hedge fund manager presentations.

Harbinger Capital Update (Performance & 13G Filing)

In a recent 13G filed with the SEC, $13.8 billion hedge fund Harbinger Capital, ran by Philip Falcone, has disclosed a 6% ownership stake in Ashland (ASH). They now own 3,789,266 shares. Curiously enough, in their last 13F filing disclosing their portfolio holdings as of June 30th, 2008, Harbinger held 5,871,426 shares of ASH. A 13G filing signifies a passive investment in a company. But, as we are all too familiar with Harbinger's activist exploits in the coal/steel arena, there's always the option they could shift this position from a passive investment, to an activist one (which would require a 13D filing).

Taken from Google Finance, Ashland Inc "is a global diversified chemical company that consists of four wholly owned divisions: Ashland Performance Materials, Ashland Distribution, Valvoline and Ashland Water Technologies."

Now, turning to Harbinger's recent performance, we see that they've had a pretty rough second half of the year. They were -12% for the month of September as of September 19th. This brings their year-to-date performance to 2%. So, the pain continues for Harbinger. I previously wrote about how many hedge funds were having a rough July. And, it looks like August and September were no different. The market has been a rollercoaster this year and I don't think anyone exemplifies this more than Harbinger. Earlier in the year, they were up as much as 42%. But, with a tumultuous turn of events, they now find themselves barely above break-even for the year. Don't get me wrong, they are still outperforming the indexes; but, it is by a much slimmer margin than it was just a few months prior. How's that for volatility?

In his letter to investors, Falcone had assured investors that they are adequately positioned to stave off any further volatility the markets may bring their way, noting that the firm had reduced exposure to some of their higher volatility holdings (both on the long and short side). Additionally, Falcone mentioned that they were not employing leverage anymore; at least as of August. His portfolio had been 52% long and 48% short. Some of Harbinger's largest positions include Calpine (CPN), Freeport McMoran (FCX), and Cleveland Cliffs (CLF). All three have seen massive sell-offs as of late, which would easily explain Harbinger's poor recent performance.

If you missed my earlier post, I've covered Harbinger's recent SEC filings here. Additionally, if you want to know about the man behind Harbinger Capital, you can read about Philip Falcone here.

Source: BBerg