Studying 13F filings -- the quarterly statements that reveal holdings of hedge funds and notable investors -- is a wise move. It can be particularly interesting to calculate price changes in these stocks, as this can approximate the returns seen over that period. Granted, we can't track a fund's short positions -- or long positions that are not disclosed on the 13F -- and we don't know precisely when during the quarter a fund bought or sold shares.
But, with all that said, our estimates are that JANA Partners's long portfolio returned 17% in the first half of 2012 and an additional 16% in the third quarter of the year. According to this, the fund is one of the highest-returning funds in our database. JANA, a value and event-driven fund, is managed by Barry Rosenstein.
JANA occasionally engages in activist investing, and one example was in its position of 6.5 million shares in fertilizer retailer and wholesaler Agrium (AGU), a holding initiated in the second quarter. The fund has said it believes Agrium would be worth more as two separate businesses. However, for now the company has rejected JANA's recommendation. Since the end of June, Agrium's stock price has risen 19%, but it still trades at only 11x trailing earnings. In any case, the company's exposure to agriculture -- which we believe will see growing demand in the next several years -- makes it a buy at current levels.
Liberty Media (LMCA) was another of the fund's favorite stocks, and strong results in the third quarter have brought the share price up 42% year to date. The diversified entertainment company commands market capitalization of $13 billion, and counts the Starz and Encore subscription channels among its product lines. It isn't as much of a pure value pick, as its forward price-to-earnings ratio is 33x. However, thanks to higher margins, it did experience strong second-quarter income growth vs. from the prior year. Even so, we don't think this is as good a pick as some of the other stocks in JANA's portfolio.
Rosenstein and his team also liked information outfit McGraw-Hill (MHP), with a 2.7-million-share position reported in this owner of Standard & Poor's. McGraw-Hill shares have gained about 20% year to date. Its business was about flat in the second quarter -- neither revenue nor earnings changed more than 3% since the prior year -- and the stock trades at 17x trailing earnings and 14x forward earnings estimates. The company is planning to spin out its education business, and spinouts can often be good investments, because management of the resulting independent companies can focus on their core operations. In light of this, we would follow any developments at the company.
JANA also sold 10% of its position in Energizer (ENR), but still owned 1.6 million shares at the end of June. This stock hasn't delivered such a high profit for JANA, having fallen 9% on the year against a rising market. The $4.6 billion company sells its brand-name batteries, as well as personal products such as Schick and Playtex. Its third fiscal quarter, which ended in June, showed somewhat better earnings but lower revenue vs. the prior year. With the stock priced at only 11x forward earnings estimates, we think Energizer is another attractive value play.
Finally, JANA increased its stake in Coca-Cola Enterprises (CCE) by 56% to 4 million shares. The distributor of Coca-Cola products in Europe, with $9.1 billion market cap, has struggled due to recent macroeconomic conditions. Revenue fell 8% in the second quarter year over year, which pulled earnings down 17%. However, Europe hasn't panned out quite as badly as investors had feared -- yet -- and so the stock is up 20% so far in 2012. Coca-Cola Enterprises trades at trailing and forward P/E multiples of 14x and 12x, respectively, and we'd say that it is a good value compared to other companies tied to the beverage business.