Hedge Funds
Jana Partners takes stake in Casella Waste, presses for 27% margin target by 2029
The activist unveiled its position at a New York investor summit, and the Vermont trash hauler's shares rose about 4%.
HedgeWeekly Hedge Fund Desk ·
Jana Partners has built a stake in Casella Waste Systems and is pushing the company to lift profitability, managing partner Scott Ostfeld said on Tuesday at the 13D Monitor Active-Passive Investor Summit in New York. Jana has not said how large its position is. Casella shares closed the session up roughly 4%, according to Investing.com, after trading about 5% higher in the afternoon.
Jana's main demand is that the Rutland, Vermont-based company publicly commit to an EBITDA margin of 27% by 2029. Casella reported a 22.7% margin for the quarter that ended June 30. The fund also wants executive pay tied more closely to shareholder value and wants Casella to bring in an outside performance-improvement consultancy.
Casella is valued at about $5.6 billion. Its stock was down about 11% this year before the disclosure and is roughly flat over five years, a period in which larger waste peers did better. Ostfeld also argued that the low valuation and the company's strong position in the northeastern US could make it attractive to a buyer. Jana ran a similar operations-focused campaign at Lamb Weston, which has since committed to cost cuts worth hundreds of millions of dollars.
Why it matters: The campaign follows a familiar Jana template of a public margin target, pay alignment and an implied takeover option, applied to a mid-cap company that has lagged its sector. For event-driven funds, the questions now are whether management adopts a target and whether a strategic bidder emerges, either of which could reprice the stock. For allocators to activist strategies, it shows managers continuing to look for operational targets in steady, defensive industries rather than only in large technology names.