Activist Hedge Fund JANA Partners Takes 8.1% Stake in HD Supply

Oct 27 2016 | 3:28pm ET

Barry Rosenstein's activist hedge fund JANA Partners has disclosed an 8.1% stake in industrial distributor HD Supply in a regulatory filing, noting it believes the company to be undervalued and that it has held discussions with members of the company’s management team about “strategic alternatives and financial and operational means of maximizing value for shareholders.”

HD Supply was spun out of Home Depot in 2007 and focuses on the distribution of industrial products for use in maintenance, repair and operations, water infrastructure and residential and non-residential construction.

The company’s stock rose slightly on the news, trading up around 2% to $33 at midday Thursday.

JANA’s October 17 13D filing shows that the activist fund beneficially owns a total of 16,250,000 shares of HD Supply, including more than 20,000 options on 2,063,800 shares that strike at various prices between $27 and $30. The total stake was acquired for an aggregate purchase price of approximately $449 million, according to the filing. 

The stake makes the hedge fund the second-biggest shareholder in HD Supply after Fidelity, which owns 10.3%, according to Reuters data.

New York-based JANA was founded by Barry Rosenstein in 2001 with $35 million. It now manages more than $11 billion in event-driven investments across the capital structure, including equity and debt. 

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