Jana's Rosenstein talks often to LBO firms

NEW YORK (Reuters) - Jana Partners' founder Barry Rosenstein said on Wednesday the hedge fund regularly consults with private equity funds on investment opportunities, the latest evidence that the barriers between the two asset classes are eroding.

Speaking at the Reuters Hedge Funds and Private Equity Summit 2007, Rosenstein stopped short of saying his fund and others coordinate their activist moves in companies they consider to be underperforming.

"I talk regularly with the heads of major private equity firms," Rosenstein said at the summit in New York. "It's a useful exchange of information."

But, said Rosenstein, "We've never had a situation where a private equity firm says to go after this company because we would like to buy it."

Rosenstein, a prominent activist investor whose $7.5 billion investment firm was allied with billionaire Carl Icahn in campaigns at Time Warner Inc. (TWX.N: Quote, Profile, Research, Stock Buzz) and Kerr-McGee Corp. KMG.N over the last two years, said his firm is building positions in several companies in which the firm may become more public in its demands.

He declined to name the target companies, saying they may not ultimately lead to public challenges to managements. "I prefer to work behind the scenes and not have a public battle," said Rosenstein, who started Jana in 2001.

Shareholder activism, which has grown in recent years with the rise in a new breed of demanding hedge fund investors, typically involves buying a large stake in a public company and pressing for operational or financial changes.

Often such investors call for share buybacks, an outright sale or other measures.

Rosenstein, whose funds hold scores of positions in stocks that aren't part of an activist strategy, made returns of more than 16 percent in the main Jana fund in 2006 and more than 17 percent in the Jana small-cap fund. His acumen has made him part of the current "hedge fund elite," according to New York Magazine this week.  Continued...