Jana Partners seek changes at Agrium to boost stock
NEW YORK |
NEW YORK Oct 1 (Reuters) - Hedge fund Jana Partners on Monday said Canadian agriculture company Agrium's share price could be some $50 higher if the company would take steps to improve its business.
Barry Rosenstein, who runs the $3.5 billion hedge fund that often pushes companies to change, said the company has lagged its peers in part because it has put together two businesses that do not fit well.
"We think it is abundantly clear that the company has underperformed its peers," Rosenstein said at the 8th Annual Value Investing Congress on Monday.
"We encourage Agrium to reverse course," Rosenstein added, asking, "Why should shareholders settle for good enough?"
Laying out a plan publicly for improvement at the company for the first time, Jana Partners put some numbers on where the partners think the share price should be. As Jana was making its case, Agrium's share price rose more than 2 percent to $105.80 on the New York Stock Exchange.
Jana said the company has no real retail experience and was encouraging it to spin off the retail unit, which sells directly to farmers.
Jana, which has owned about 4 percent of Agrium since the end of June, has so far tried to privately persuade the company to cut costs and consider the spin-off. But there has been no movement and Jana has since gone public by making its presentation at the conference where prominent hedge fund managers, including Bill Ackman, Mick McGuire and David Einhorn are scheduled to present.
Rosenstein said that companies "are never happy when we show up," but that management often comes around to recognizing that the hedge fund's ideas are often good ones.
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