7 Potential New Targets for Activist Investor That Made a Killing on Whole Foods
Barry Rosenstein, Jana Partners.

Jana Partners' Barry Rosenstein this week liquidated his activist position in Whole Foods (WFM) at a major profit, in a move that completes an activist campaign that propelled the organic grocer to sell itself to Amazon.com Inc. (AMZN) in an industry-transforming $13.7 billion deal.

The sale marked a major victory for Jana Partners, which in April launched a campaign to have Whole Foods consider selling itself. It also generated a windfall of about $320 million, which Rosenstein will likely invest partly into another insurgency campaign in the coming months.

Jana Partners has a number of existing investments it could transform into fully blown insurgencies by allocating some of its Whole Foods profits. The New York-based fund's next target is likely to be a U.S. corporation with more than $1 billion market capitalization.

One candidate: The activist fund owns a 0.3% stake in Acadia Pharmaceuticals Inc. (ACAD) , a drug company that also features a 0.6% investment by another major activist, Elliott Management's Paul Singer. The company has frequently been mentioned as a potential buyout target, but Jana or Elliott (or both) could significantly increase their positions and agitate for a deal if one doesn't happen soon.

Research firm Leerink had previously cited Biogen Inc. (BIIB) , Teva Pharmaceutical Industries Ltd. (TEVA) , Allergan (AGN) and Pfizer Inc. (PFE) , all of which have some focus on the central nervous system space that Acadia covers, as potential acquirors.

A buyer would need to consider both Acadia's Nuplazid (Pimavanserin) drug for Parkinson's disease and its recent progress on an early stage Alzheimer's disease psychosis program. The company hopes to start a phase 3 study later this year. However, from a buyer perspective, the program carries a significant amount of uncertainty since the study could still fail or be terminated. A buyer may not have a lot of interest in paying full value for the Alzheimer program at this point. Another potential obstacle could be Baker Brothers Investments, a life-sciences fund that is Acadia's largest shareholder with a 21% stake and two seats on Acadia's board. 

Another potential Jana target could be WebMD Heath Corp. (WBMD) . Jana recently reported owning a 1.2% stake in the health information portal. In February, WebMD reported hiring J.P. Morgan Securities LLC as a financial adviser to help it conduct a strategic review.

Another activist, Blue Harbour Group's LP, began building a stake in WebMD shortly after the review was announced and now has a 9% stake. Blue Harbour's Clifton Robbins engages in a collaborative behind-the-scenes form of activism.

It's possible that Jana Partners or Blue Harbour could push to have the company sold or broken into two businesses if it doesn't take M&A related steps on its own.

Robbins and his team have had some success encouraging companies to split in two. For example, in 2014, at the annual IMN Active-Passive Investor Summit, Blue Harbour urged Babcock & Wilcox to divide into two businesses, which it ultimately did in a big win for shareholders.

If you liked this article you might like

Cramer: Food Stocks Are Going Hungry

Amazon Teams With Food Delivery Service to Launch Amazon Restaurants

Target Is Taking on the Big Guys

This Walmart Concept Just Saw the Most New Visitors in Over 3 Years

Boeing Flies Dow to Another Record Close, S&P 500 and Nasdaq Miss Out