JANA Nirvana fund to close to new investors; others under review

BOSTON, April 29 Tue Apr 29, 2014 12:59pm EDT

BOSTON, April 29 (Reuters) - JANA Partners, the hedge fund founded by activist investor Barry Rosenstein, will stop accepting new money into its $4.7 billion Nirvana funds on May 1, and may limit capital into other portfolios, according to a letter to investors.

Several other hedge funds have also curbed inflows or returned money because of a lack of clear investment opportunities at a time when demand for hedge funds has been growing.

"Given the significant growth in our capital base in recent years it would be prudent to close our JANA Nirvana funds to outside investments," JANA Partners said in its quarterly letter seen by Reuters on Tuesday.

"We will also continue to monitor the capital base of our JANA Partners funds, which may close as well in the near future," the letter said.

JANA Nirvana funds, launched in 2007, has some overlap with the firm's 13-year-old JANA Partners funds, which include an onshore and offshore portfolios, but generally has fewer investments.

JANA became the latest hedge fund to limit its size. Daniel Loeb's Third Point, Highfields Capital and Baupost Group all returned money to clients last year. Some hedge fund managers have privately told investors they were concerned about finding investment opportunities.

But for investors, including pension funds, JANA's decision illustrated how difficult it has become to place money with some of the industry's best performers.

JANA Partners flagship funds have returned an average 13.9 percent since its launch in 2001.

In the letter, the firm said it bought shares in pharmacy chain Walgreen Co and aircraft leasing finance business AerCap Holdings NV during the first quarter of 2014.

JANA along with investors Corvex and Och-Ziff Capital Management Group LLC have pressured Walgreen to move its headquarters to Europe after its takeover of Swiss-based Alliance Boots, to take advantage of lower tax rates there.

JANA praised some recent executive moves at Walgreen and said the company can save more than the $1 billion in cost cuts it promised at the time of the merger.

"Beyond cost cuts, we see interesting opportunities for the combined companies to grow internationally through M&A," the firm said in the letter. Walgreen stock has climbed 16.5 percent since January.

During the first quarter the JANA Master Fund rose 1.7 percent, keeping pace with the Standard & Poor's 500 Total Return Index, which climbed 1.8 percent. (Reporting by Svea Herbst-Bayliss; Editing by Richard Valdmanis; and Jeffrey Benkoe)

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