This content is from: Portfolio

Morning Brief: JANA Mulls Possible Proxy Fight With Pinnacle Foods

The activist hedge fund firm took out a 9.1 percent stake in the packaged foods company and says its shares are undervalued.

  • By Stephen Taub

Barry Rosenstein’s JANA Partners has identified a new activist target. The hedge fund firm said in a regulatory filing that it owns more than 10.8 million shares of packaged foods company Pinnacle Foods, or 9.1 percent of the total, and threatened to launch a proxy fight sometime in the future, according to a new regulatory filing. It also entered into a cooperation agreement with three individuals, who collectively acquired 512,000 shares, boosting the group’s total stake to 9.53 percent.

Each of the three individuals agreed to become part of a slate of director nominees if JANA decides to launch a proxy fight in 2019, according to the filing. JANA owned 1.4 million shares of Pinnacle at year-end, meaning investors could have speculated that the activist might make a move on the company sometime in the future.

In Thursday’s filing, JANA said the shares are undervalued and represent an attractive investment opportunity, drawing heavily on typical boiler-plate 13D language. It did say it intends to hold talks with Pinnacle’s board and management about ways to boost value, including operations, costs and margin execution, as well as capital allocation and capitalization. JANA also said it will evaluate the possibility of a sale or other consolidation opportunities potentially available “as a result of its scale position in the frozen foods sector.” It also said it “may pursue board change.”

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Carlson Capital cut its stake in Renewable Energy Group to 3.42 percent. As a result, it no longer must file regulatory updates whenever it buys or sells additional shares of the supplier of advanced biofuels unless it boosts its stake again to at least 5 percent.

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The total amount of money invested in the hedge fund industry rose in the first quarter by $4.5 billion to a new record of $3.215 trillion, according to a new report from HFR. Total net inflows amounted to $1.1 billion. This follows total inflows of nearly $10 billion in 2017. This is the fourth straight quarter of positive hedge fund flows. In the first quarter, the HFRI Fund Weighted Composite Index gained just 0.14 percent. Event-driven enjoyed the largest amount of capital inflows in the first quarter. The strategy pulled in $4.4 billion after enjoying inflows of $10 billion in 2017. Fixed income-based relative value arbitrage strategies received $2.3 billion of new capital. On the other hand, equity hedge strategies saw an outflow of $6.57 billion in the first quarter after experiencing $5.4 billion of outflows in 2017.

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