Jana Partners in third quarter took new Valeant stake, upped eBay stake

NEW YORK (Reuters) - Jana Partners LLC, the $11 billion hedge fund run by Barry Rosenstein, took a new stake in Valeant Pharmaceuticals International Inc and vastly increased its holdings of online auction site eBay Inc in the third quarter, according to a regulatory filing on Friday.

Jana bought 1.284 million shares of Valeant, which has been trying to buy Botox-maker Allergan Inc this year. But the hostile bid soon brought scrutiny from the U.S. Securities and Exchange Commission, which began looking at the potential deal in August.

Jana added more than 12 million shares of eBay, bringing its total stake to 13.063 million shares.

EBay this year bowed to pressure from activist investor Carl Icahn to spin off its PayPal payments service. The action is expected to give PayPal more flexibility to make deals in the rapidly evolving payments sector as growth in eBay's traditional e-commerce business slows.

Jana declined to comment. Messages to eBay and Valeant requesting comment were not immediately returned.

Rosenstein's fund also increased its stakes in Groupon Inc by 10 percent, for a total of 51.68 million shares, and increased its stake in Walgreen Co, by 12.5 percent, for a total 12.5 million shares.

In September Rosenstein won a seat on the Walgreen board.

Also in the third quarter, Jana took a new stake, of 300,000 shares, in Chinese e-commerce company Alibaba Group Holding Ltd and a new stake, of 842,268 shares, in fast-food company McDonald's Corp.

Jana became the latest among activist investors - those sensing the opportunity to help turn around struggling businesses - to focus on McDonald's.

"We welcome all investments in McDonald's," a McDonald's spokeswoman said. "As always, our focus is on maximizing shareholder value through initiatives that ultimately benefit our customers."

After Don Thompson became chief executive in July 2012, business at McDonald's, which outperformed its peers during the recession, began to slow.

The 13F filings with regulators made by Jana and other funds provide a window onto the strategies of some of the world's biggest investors. But the view is limited. Not only do the documents look back to the previous quarter, they do not disclose short positions.

The U.S. Securities and Exchange Commission also sometimes allows money managers not to disclose sensitive positions.

(Additional reporting by Bangalore newsroom and Yasmeen Abutaleb in New York; Editing by Jennifer Ablan, Steve Orlofsky and Leslie Adler)