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I really need to become an activist investor...



February 15, 2012 – Comments (2) | RELATED TICKERS: MPC , ENR , NFLX


I really need to look into becoming an activist investor.  It looks like some pretty darn pretty good work if you can get it. The activist investor hedge fund Jana Partners began purchasing shares of Marathon Petroleum (MPC) back in November, eventually accumulating a 5.5% stake in the company at an average price of $32.28 per share.

After Jana made a whole lot of noise and rattled its sabers, Marathon Petroleum eventually announced a large share buyback and that it was considering spinning off its pipeline business as an MLP. The day that announcement was made, MPC's share price surged 10%...and Jana began selling shares. Jana sold 3.9 million shares sold between Feb. 1 and Feb. 9, pulling in a cool $44 million profit. It still holds a 4.5% stake in MPC.

Again, that's some good work if you can get it. Buy a lot of stock, harass the management for a few weeks, see the share price soar and sell. Rinse and repeat.

I still think that a Marathon pipeline spin-off has the potential to be very attractive...if the numbers are right.

Jana Partners Scores on Marathon Petroleum Spinoff News

While we're on the subject of the hedge fund Jana Partners, here's what it was up to last quarter:

The hedge fund acquired 997,824 shares of battery maker Energizer, based in St. Louis, valued at about $77 million and 648,594 shares of Netflix valued at about $45 million, according to a filing with the U.S. Securities and Exchange Commission. Netflix is an online and mail-order video-rental service based in Los Gatos, California.

Jana Partners Took Stakes in Energizer and Netflix Last Quarter

This is the second intelligent investor, if you consider Jana to be one person, that I have seen take a stake in Energizer (ENR). The other is Mario Gabelli. Here's what Mr. Gabelli had to say about Energizer during a Barron's Roundtable a while ago:

Energizer Holdings [ENR] hasn't done much in the past two years. It sells batteries, shaving products and other consumer products. There are 70.6 million shares and the stock is 70, so that's a $4.9 billion market cap. They have about $2 billion of debt. Earnings for the fiscal year ending Sept. 30 will be about $6.15 a share on $4.5 billion of revenue. They will have a hiccup in the first quarter, but earnings could climb to $10 a share by fiscal 2015.

Schafer: Driven by what?

Gabelli: They will be virtually debt-free by 2015. Ebitda is close to $900 million, and that will keep rising. The battery business is low-growth but a great cash generator. It is a $47 billion business over all. The wet-shave market is $14.5 billion at retail globally. Energizer sells the Schick brand and just bought American Safety Razor out of bankruptcy. The company makes acquisitions and diversifies neatly. It also sells off brands, monetizing their value.

I don't know that I see the catalyst here that will cause Energizer's stock to increase in the near future, but I'm going to keep an eye on this one.

This rapid "unlocking of value" if you want to call it that by Jana in MPC goes to show how profitable it can be to follow in the footsteps of activist investors in the right situations.  That's why I follow their activity so closely.

Does anyone out there have any favorite activist investors that they follow?  I'd love to add to my list. 

Thanks for reading and Have a great day everyone!


2 Comments – Post Your Own

#1) On February 15, 2012 at 8:25 PM, rofgile (99.35) wrote:

That's a bizarre story.  I guess Jana's actions benefitted all shareholders, so that is good.  


On a side note, I would really love to read in the WSJ one day:

"Activist investor TMFdeej latest Wall Street action is turning some heads.."


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#2) On February 15, 2012 at 8:44 PM, EnigmaDude (55.14) wrote:

So - it's a bad time to short Netflix?

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