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Why Whole Foods Market, Inc. Soared Today

By Anders Bylund - Updated Apr 10, 2017 at 5:27PM

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Activist investors have built a large stake in the specialist grocery chain, and they want to make some changes.

What happened

Shares of Whole Foods Market (WFM) jumped as much as 11.7% on Monday afternoon, starting with a sharp surge at 2:30 p.m. ET. The stock closed 10% higher at the end of the day.

So what

In a freshly posted 13D filing with the Securities and Exchange Commission, activist investor firm Jana Partners disclosed an 8.8% stake in Whole Foods Market. This was the first time Jana reported owning any part of the organic-grocery chain. More than 60% of the reported holdings were acquired in the open market over the past 60 days.

Whole Foods storefront.

Image source: Whole Foods Market.

Now what

In the filing, Jana notes that it has "substantial experience" in the food and retail sectors. Whole Foods' management and board of directors should expect the firm to demand discussions about the company's future, addressing issues such as the company's "chronic underperformance for shareholders," optimizing Whole Foods' real estate strategy, and finding new ways to market the brand.

Jana does indeed have a history of making waves in the retail sector -- and especially the grocery-store market. The firm, managed by billionaire Barry Rosenstein, helped take Safeway private in 2014, for example, and Rosenstein recently held a chair on Walgreens' board of directors.

Whole Foods sure could use some fresh ideas right now. It will be interesting, to say the least, to see Jana shaking things up. 

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