market folly

Barry Rosenstein's hedge fund firm JANA Partners has filed a 13D with the SEC regarding shares of Ashland (ASH).  Per the filing, JANA has revealed a 7.4% ownership stake in ASH with over 5.8 million shares.

This is a brand new position for the hedge fund.  However, they have owned the name in the past: back in 2010.  The latest filing was required due to portfolio activity on April 1st, though JANA was out buying ASH shares as early as February 12th and as recent as April 10th according to the filing, at prices ranging from $76.xx to $80.xx.  ASH shares currently trade around $84.


Breakdown of Options Position

In the fine print, we see that JANA's position includes 4,145 and 2,210 call options with strike prices of $65 and $70 that expire next week (April 19th).  They also own May expiration calls via 1,465 options with a strike of $60 and 1,445 options with a strike of $65.  Additionally, they've sold 2,270 April puts with a strike of $70 and they've also sold 1,445 May puts with a strike of $65.


Reason For Purchasing ASH Shares

As to why they purchased the stake, JANA reveals their intentions in the "purpose of transaction" section of the 13D filing:

"The Reporting Person acquired the Shares because it believes the Shares are undervalued and represent an attractive investment opportunity. The Reporting Person has had discussions with the Issuer’s management relating to, among other things, the Issuer’s business, corporate structure, capitalization, operations, stragetgy and future plans. The Reporting Person expects to continue to have such discussions with the Issuer’s management as well as with the Issuer’s board of directors, shareholders and other parties relating to such matters, and may take other steps seeking to bring about changes to increase shareholder value."

Per Google Finance, Ashland is "a global specialty chemical company that provides products, services and solutions throughout a variety of industries. Ashland’s business operates in four segments: Ashland Specialty Ingredients; Ashland Water Technologies; Ashland Performance Materials and Ashland Consumer Markets."

For more from this hedge fund,  be sure to check out Rosenstein's in-depth interview with Columbia Business School.