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By Luciana Lopez and Lisa Baertlein
NEW YORK (Reuters) - Jana Partners LLC, the $11 billion hedge fund run by Barry Rosenstein, took a new stake in Valeant Pharmaceuticals International Inc (TO:VRX) and vastly increased its holdings of online auction site eBay Inc (O:EBAY) in the third quarter, according to a regulatory filing on Friday.
Jana bought 1.284 million shares of Valeant during the third quarter, which has been trying to buy Botox-maker Allergan Inc (N:AGN) 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 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 (O:GRPN), adding 10 percent to 51.68 million shares, and Walgreen Co (N:WAG), by 12.5 percent to 12.5 million shares.
In September Rosenstein won a seat on the Walgreen board, with Jana set to work with the drugstore chain to cut costs and change the kinds of products stocked in the company's stores.
Jana also took a new stake of 300,000 shares in Chinese e-commerce company Alibaba Group Holding Ltd (N:BABA) and a new stake of 842,268 shares in fast food company McDonald's Corp (N:MCD) in the quarter.
The fund became the latest among activist investors - those sensing the opportunity to help turn around struggling businesses - to focus on McDonald's, buying 842,268 shares of the company in the quarter. After McDonald's Chief Executive Don Thompson took the helm in July 2012, business at the company, which outperformed its peers during the recession, began to slow.
Jana's holdings, disclosed in a so-called 13F filing with regulators, 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 also do not disclose short positions.
The U.S. Securities and Exchange Commission also sometimes allows managers not to disclose sensitive positions.
(Additional reporting by Bangalore newsroom and Yasmeen Abutaleb in New York; Editing by Jennifer Ablan and Steve Orlofsky)