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The Morning Brief: Jana Discloses Qualcomm Stake, Offers Advice

Jana Partners Monday disclosed its latest activist target. The New York hedge fund headed by Barry Rosenstein disclosed that it owns more than $2 billion of Qualcomm and is pushing the chipmaker to split its semiconductor business from its patent-licensing unit. Jana also wants the company to accelerate its stock buybacks, cut costs and revamp executive compensation, according to The Wall Street Journal. In an interview with CNBC, Rosenstein said he mostly wants Qualcomm to execute a transparent analysis and make the right decision. He does not rule out a possible proxy fight but doubts it will come to that.

In response, Qualcomm issued a statement saying it welcomes the input and that it is “committed to maintaining an active dialogue with all stockholders.” The company also pointed out that its “innovations have made smartphones the most pervasive technology of our time,” through its inclusive licensing program and chipsets, and that it generates strong operating cash flows, and is “committed to the ongoing return of capital to stockholders while retaining the financial flexibility to execute on our business plans.” It also noted that it recently “significantly” boosted its stock repurchase authorization to $15 billion and plans to repurchase $10 billion of stock within one year in addition to its current capital return commitments.

Jana also disclosed it has owned a significant stake in Qualcomm since at least the end of December. In an amended 13F filing for the fourth quarter, the company said it owned more than 4.4 million shares of Qualcomm worth $327 million at the end of that period as well as $458 million worth of call options on the stock. Activists often seek and obtain waivers from the Securities and Exchange Commission to avoid disclosing 13F holdings. The deadline for filing the fourth quarter 2014 13F was February 17. Qualcomm stock, which surged at Monday’s open, closed down less than 1 percent. The stock fell more than 6 percent in the first quarter, detracting from Jana’s performance, after tumbling as much as 16 percent at one point.

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Clifton Robbins’ New York-based Blue Harbour Group disclosed on Monday that it owns 7.8 percent of Investors Bancorp. The investor, who fashions himself a friendly activist, says the financial company has $2 billion in cash that could be used to buy back stock, boost its payout and eventually make acquisitions. The stock rose 1.3 percent on Monday.

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Corvex Management’s Keith Meister concedes that the nature of activism will change over the years but stresses the basic strategy will remain sound. “Will activism change over the next several years? Of course it will, but the general concept of value investors having ideas, partnering with companies, expressing ideas and helping to create value — I don’t think that is a fad. I think that’s a multi-decade thing,” he told CNBC in an interview Monday morning. “Now, how it gets expressed at different times, I think that’s the piece that changes.” Meister spent seven years as vice chairman of the board of Icahn Enterprises, the general partner of Icahn Enterprises. For part of that time, he also served as CEO and as principal executive officer of Icahn Enterprises. For nearly six years he also served as a senior managing director with Icahn Capital, the hedge fund Icahn shuttered in 2011. Meister told CNBC that private equity investors have become formidable competitors to activists.

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Bruce R. Berkowitz’s The Fairholme Partnership has gotten off to a quick start. His $441 million in assets value-oriented fund—it invests in stocks and fixed-income—rose 8.3 percent in the first quarter.

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