Barry Rosenstein's Jana Partners is cutting its two stock-picking funds that manage billions to focus on its core strategy of investing in companies to improve their performances.
The firm told investors in a letter obtained by Business Insider that it plans to liquidate the Jana Partners and Jana Nirvana funds to focus on $1.5 billion activist fund Jana Strategic Investment. The manager will also launch a socially activist fund called Jana Impact Capital later this year.
"This is where we have delivered our best returns for investors, developed a real competitive advantage, made our mark on numerous industries, and where we see our future and the richest opportunity set," the letter said. The letter noted that investors in the chopped funds can reinvest in Jana's activist fund or pull their money from the firm.
Jana, which managed more than $11 billion at its peak in 2015, follows $21 billion manager BlueMountain Capital Management in cutting its traditional stock-picking funds. Multi-strategy managers are moving away from the crowded long-short space, where funds bitterly fight to eek out returns, to focus on more unique competencies investors crave.
According to Hedge Fund Research, stock-picking hedge funds lost an average of 7% in 2018, worse than the overall industry, which declined by an average of 6.7%. The Jana Partners was down 8% last year, according to Reuters, and has trailed the stock market every year since 2013.
Sign up here for our weekly newsletter Wall Street Insider, a behind-the-scenes look at the stories dominating banking, business, and big deals.
Old school stock-pickers like billionaire Leon Cooperman and George Soros' protege Stanley Druckenmiller have said the reason long-short managers can no longer perform like they once did is because quant funds that trade based on algorithms distort the market. Large quant managers, like AQR, have brushed off this criticism, and industry insiders say individuals with quant backgrounds will be in high demand this year.
Jana's activism strategy has landed the firm board seats at Tiffany & Co. and Orville Redenbacher parent company ConAgra Brands. The firm also partnered with California State Teachers Retirement System last year to pressure Apple to help parents limit screen time for young children.
A Jana spokesman declined to comment.
