The Morning Brief: Jana Partners Closes Door to Nirvana

May 1 is the last day that Barry Rosenstein’s Jana Partners will accept outside capital to its Nirvana fund, as we reported earlier. “After the close, we may at our discretion accept capital from a limited number of investors who had already begun diligence on the Nirvana funds prior to the close, as well as fulfill the remaining portion of our limited pre-existing capacity commitments and selectively replace redemptions,” Rosenstein tells clients in the firm’s first quarter report. The Nirvana Fund has the same portfolio as the flagship Jana Partners strategy, but takes higher gross exposures, typically 1.5 times the positions in the flagship. “We may in the future re-open Nirvana funds to new capital but have no current plans to do so.” The report also said the firm might close Jana Partners itself to new investors “in the near future.”

Herbalife received ringing endorsements from two prominent activist investors. Speaking at the Milken Institute Global Conference in Beverly Hills, California, Barry Rosenstein, the founder of Jana Partners, and Jeffrey Ubben, a co-founder of ValueAct Capital Partners. both said they don’t believe the multi-level marketer of nutrition products is a pyramid scheme, according to Bloomberg. At the conference, Rosenstein also said he expects the smaller activist firms to fade away, claiming size is important with this strategy. Ubben repeated what he told Alpha last week: that many companies are too quick to agree to a compromise with activist-wannabes.

Metacapital Management’s Deepak Narula, who in 2012 posted a 41 percent gain playing the mortgage bond market, plans to launch a fund that will invest in the debt of delinquent homeowners who have not lost their homes to foreclosure, according to Bloomberg, citing an April 24 letter to investors. He plans to start the Metacapital Mortgage Loan and Credit Fund in the third quarter. “The valuations at which these loans trade certainly make this strategy attractive,” Narula told Bloomberg. “They don’t require home price appreciation, that obviously would be an added benefit, but based on current valuations you don’t need to bank on home price appreciation to have a profitable strategy.” He declined to comment on the new fund specifically.

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Shares of eBay fell 5 percent after the company said it took a $3 billion tax charge on $9 billion of foreign earnings from the prior years that it apparently repatriated. eBay reported that the charge left it with $6 billion of available U.S. cash, which it says will prove “greater U.S. financial flexibility.” Some observers think eBay will use the cash to buy back shares. But on Wednesday, at least, investors did not treat this as good news.

William Ackman’s Pershing Square Capital Management sold 3.22 million shares of Canadian Pacific Railway for $149.75 a share according to SEC filings, reducing its stake to 8 percent. All of the sales took place on April 28.

Tiger Cub Hound Partners disclosed in a regulatory filing that it owns 6.15 percent of Tesoro Corp., an independent refining and marketing company. The filing indicates it is a passive investment.

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