Jana eyes pushing Callaway Golf for changes, stock surges

NEW YORK (Reuters) - Activist investment firm Jana Partners said on Thursday it owns a 9.2% stake in Callaway Golf Co and may push for changes including a possible sale, sending shares of the golf equipment maker up as much as 16%.

FILE PHOTO: Barry Rosenstein, founder and managing Partner of JANA Partners LLC., speaks during the Sohn Investment Conference in New York May 4, 2015. REUTERS/Brendan McDermid/File Photo

Jana said in a regulatory filing that Callaway’s shares are “undervalued” and that it plans to hold discussions with the company’s board about “strategic alternatives including exploring a sale of the Issuer or asset divestitures.”

A spokesman for Jana declined to comment.

A Callaway spokesman, Patrick Burke, said the company tries to maximize value for all shareholders and has always had an open dialogue with its investors.

Jana and three executives who have experience in the retail sector and have served on corporate boards made the filing early on Thursday and said they now own nearly 9 million shares, after buying them in May and early June for an average price of $15.71 a share.

Shares of Callaway, which has a market capitalization of $1.7 billion, rose as much as 16.3% on Thursday and were still up 14.2% at $18.17 on Thursday afternoon on the New York Stock Exchange.

New York-based Jana is one of the investment industry’s most closely watched activists, having previously won board seats at Tiffany & Co and ConAgra Brands Inc and pushing for Whole Foods Market Inc and Pinnacle Foods Inc to sell themselves.

Jana’s investment comes only months after Callaway, based in Carlsbad, California, completed its roughly $476 million acquisition of German outdoor apparel company Jack Wolfskin in January. Since January, the stock price has risen 3.92% but it has dropped 21% over the last year, suggesting that Wall Street questioned the acquisition.

Jana often brings in high-powered consultants on its active situations, underscoring its seriousness to the target company and other investors. This filing shows that James Lillie, a former CEO of Jarden Corporation, bought 150,000 shares, while Cynthia Davis, a former vice president at Nike Inc, purchased 13,333 shares and Roger Farah, a former co-CEO of Tory Burch LLC and executive vice chairman at Ralph Lauren Corp bought 100,000 shares.

In January Jana, founded by Barry Rosenstein, shut down two stock-picking hedge funds to focus on its main strategy of investing in a handful of companies and pushing management to improve performance through its Jana Strategic Investment (JSI) fund. A fund that will push companies on environmental, social and governance issues is being planned.

Reporting by Svea Herbst-Bayliss in New York; Editing by Matthew Lewis