ConAgra (CAG) Shares Surge 10% after Jana Reveals its Stake

ConAgraFood conglomerate ConAgra Foods, Inc. (NYSE/CAG) has been pushing to expand its industry presence, but one disgruntled shareholder plans to shut management’s plans down. (Source: Securities and Exchanges Commission, June 18, 2015.)

On Thursday, June 18th, activist hedge fund Jana Partners LLC revealed a 7.2% stake in the maker of “Chef Boyardee,” “Hunt’s” sauces, and “Slim Jim.” According to an SEC filing, the hedge fund is also pushing to elect new directors to the company’s board. ConAgra’s shares surged 10.2% to $43.13 during Friday’s trading session.

In the filing, Jana Partners said that the purpose of the transaction was because ConAgra represented an attractive investment opportunity. Jana believed shares of ConAgra were undervalued. However, Jana’s main point was that ConAgra had failed to deliver value to the company’s shareholders, especially since ConAgra’s acquisition of Ralcorp Holdings, Inc.

ConAgra completed the acquisition of Ralcorp Holdings in January 2013. After the acquisition, ConAgra became the largest private-label food manufacturer in the U.S.

The deal has failed to create value for ConAgra’s shareholders, according to the Jana’s SEC filing. ConAgra’s earnings have missed its guidance many times, dividend growth has been stagnant, and the company is making negative revisions to its long-term earnings targets.

With regards to this lackluster performance, Jana would nominate three individuals for the election of ConAgra’s board of directors. Jana believes that Alford, Lawrence, and Rosenstein, the three nominees, have the necessary expertise and experience to help the company create shareholder value.