Riding the Coattails of Activist Investors is a Profitable Strategy
I was reading a great article on JANA Partners this afternoon and I came across an amazing statistic that reinforces why I keep such a close eye on the activist investor's moves. According to the article, since 2006 the average return for a stock in which JANA had filed a 13D has been 65% versus a return of only 10% in the S&P 500 over the same period. Wow, now that's the sort of outperformance that I'm looking for.
For anyone who's interested, companies that JANA currently has an activist position in include:
Rockwood Holdings (ROC)
I personally own ROC in both CAPS and in real life. The thesis behind the investment is that the company's strong core specialty chemical business has benefitted from an upturn in the economy, providing it with a ton of money that it can return to shareholders after a recent acquisition that it had earmarked the funds for fell through. Add to this the fact that the company is in the process of spinning off its terrible Titanium Dioxide business, enabling its stock to trade at a higher multiple going forward.
I have been aware of the company's position in Agrium for quite some time. AGU's management has been very reluctant to work with JANA and its efforts to get it to spinoff it's retail business. Despite this fierce battle with the company's management, Agrium's stock has done extremely well as secular tailwinds in the fertilizer segment keep propelling it higher. I personally have enough exposure to fertilizer through my investment in UAN, so I am not along for the rode on this one.
QEP Resources (QEP)
I just became aware of JANA's involvement in QEP a few days ago. From what I have been able to gather about the situation thus far, after establishing a position in the company in November and December JANA convinced QEP to spin off its midstream assets into an MLP. You know that I'm a big fan of this sort of move. I am still looking into this one but it looks pretty good so far. I have gone long QEP in CAPS and may initiate a real money position in it at some point in the future.
Well, I'm off to a Super Bowl party. As a Jets fan, I have no rooting interest but I have decided to root for the 49ers because Colin Kaepernick seems like a much more likeable person than Baltimore's Ray Lewis. Kaepernick is absolutely amazing to watch.
Thanks for reading everyone. Enjoy the big game!