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Barnes & Noble investors reassess Jana stake purchase

by Lou Whiteman | Published April 25, 2012 at 9:34 AM

Investors in troubled bookseller Barnes & Noble Inc. are rereading the news that activist hedge fund Jana Partners LLC has acquired an 11.6% stake in the chain. After bidding up Barnes & Noble shares nearly 17% on Monday, April 23, they grew more pessimistic on Tuesday. In midmorning trade, the stock was down 4.5% to $12.80.

Jana, which often agitates for change at companies it invests in, disclosed late Friday that it had bought 6.959 million shares in Barnes & Noble. New York-based Barnes & Noble, which has been laboring to adjust its business model in the face of growing online sales, offered no comment on the investment.

Unlike former rival Borders Group Inc., which filed for liquidation in November 2011, Barnes & Noble has been credited with being more aggressive in facing new threats from the likes of Amazon.com Inc. Barnes & Noble has invested heavily in its e-reader Nook, which rivals Amazon's more popular Kindle, and has streamlined its retail presence.

Barnes & Noble said in January it planned to explore a spinoff or sale of its Nook digital business, which remains a money-loser despite some sales success.

This is the second-largest stake taken in Barnes & Noble in recent months, following a February disclosure that hedge fund G Asset Management LLC had bought a 5% stake in the company.

G Asset in its filing said it supported the push to sell or spin off Nook, but wanted that review expedited before technological changes made the move unfeasible.

Overall, Jana would rank as the third-largest shareholder in Barnes & Noble, trailing only company founder and chairman Leonard Riggio and Ron Burkle's Yucaipa Cos. LLC.

Jana made a recent foray into the publishing world. In November Jana and Ontario Teachers' Pension Plan disclosed they had acquired a combined 5.2% stake in McGraw-Hill Cos., intending to push for change. They urged the company to separate its large education unit from its Standard & Poor's business and other financial assets. In the wake of the activist pressure, McGraw-Hill unveiled a restructuring plan that would leave education as a standalone entity while merging its index business with that of CME Group Inc.

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Barnes & Noble investors reassess Jana stake purchase

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