Barry Rosenstein of Jana Partners sat down with CNBC earlier this morning with a big, big smile on his face, thanks to the fact that his fund essentially made tens of millions of dollars this morning following the announcement that Microsoft was investing $300 million in Barnes & Noble to spin out the Nook e-reader.Jana Partners recently took a 12% stake in the bookseller, whose stock is up nearly 70% today.
Rosenstein told CNBC’s David Faber that he believed a transaction like today would occur with Barnes & Noble after the company announced growth plans for the Nook back in January.
“The price we got in at… that was a company that when you value the retail, at 3x EBITDA, which is a very conservative evaluation,” Rosenstein said. “We got the nook business for nothing. So we figured we had very little downside.”
In addition, Rosenstein said he sees even more potential growth at Barnes & Noble, because its business of as book retailer has lots of potential valuable now that its number one competitor, Borders, has gone bankrupt.
“I think there’s a long way to go with this stock,” he said. “It doesn’t fully factor in the full growth prospects of the Nook… [and[ the bricks and mortar business is still quite valuable… “You’re going to see significant cash flow from that company for many years to come.”