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Jana shorted Whole Foods in 2014, has yet to directly communicate with CEO

  • Whole Foods fell more than 2 percent Tuesday after jumping nearly 10 percent Monday
  • Activist investor Jana Partners took a 9 percent stake in the grocery chain
  • Jana, which shorted the grocer in 2014, has yet to engage with Whole Foods CEO John Mackey

Whole Foods is down more than 2 percent on Tuesday after jumping nearly 10 percent on Monday after activist investor Jana Partners took a nearly 9 percent stake, becoming the second-largest shareholder in the grocery chain.

Sources say the activist investor previously shorted Whole Foods in 2014, meaning that the investor borrowed shares and immediately sold them, usually betting on a future decline in price.

The activist investor is reportedly primarily focused on two objectives: operational improvements and a possible merger, depending on what offers may be on the table, according its filing on Monday where Jana wrote that it primarily wanted to address the grocery chain's "chronic underperformance."

However, Jana Partners and Whole Foods CEO John Mackey have yet to directly engage in communication, according to sources close to the situation.

According to sources, Jana believes there's an "excellent opportunity to the fix the business" and wants to do so by introducing changes within Whole Food's board and senior management. Potential nominees include Glenn Murphy, former Gap Inc. chief executive, Thomas "Tad" Dickson, former Harris Teeter supermarkets CEO, and Meredith Adler, former Barclays stock analyst.

Shares of Whole Foods have lost half of its value in the last several years and have dramatically lagged the S&P 500 within the past year.