Starboard Value 13Ds are worth paying attention to. The hedge fund, led by manager Jeff Smith, is one of the most prolific — and successful — activist funds.
Since 2011, Starboard has filed 305 activist reports: 47 initial 13Ds and 258 13D/A SEC filings. Over this period, investors who bought when Starboard filed an initial 13D and sold when the fund disclosed significant selling would have averaged annualized profits of 25.89%. That’s according to data from WhaleWisdom.com.
Companies or individuals that acquire 5% or more of a company’s shares must disclose their ownership and intentions. 13G filings are made by “passive” investors. 13D filings however are made by “activist” investors who acquire 5%+ of a stock. An activist seeks changes that will lead to a higher stock price at the targeted company.
Any future changes in the facts contained in the initial 13D requires an amendment (13D/A filing). Should the activist’s holdings drop below 5%, a 13D/A disclosing that event must be promptly filed.
Below are Starboard Value 13Ds filed by the fund since it began operations in March of 2011. Initial 13Ds are the catalyst for entry. The annualized follower return represents buying the day of the initial filing and closing the position when a 13D/A discloses selling that drops the fund’s stake below 5%. The average holding period for a position was 481 days.
Starboard Value 13Ds: Follower returns.
|Filing||Fund||Symbol||Annualized follower return||Entry date||Exit Date||Days held|
|SC 13D||STARBOARD VALUE LP||EXTR||29.63%||4/22/11||8/2/13||833|
|SC 13D||STARBOARD VALUE LP||GEC||-11.87%||5/10/11||8/5/15||1548|
|SC 13D||STARBOARD VALUE LP||DSPG||10.19%||6/20/11||12/1/14||1260|
|SC 13D||STARBOARD VALUE LP||EXTR||29.63%||8/22/11||8/2/13||711|
|SC 13D||STARBOARD VALUE LP||BKR||-4.83%||8/25/11||10/31/11||67|
|SC 13D||STARBOARD VALUE LP||RGS||-32.31%||9/15/11||7/17/14||1036|
|SC 13D||STARBOARD VALUE LP||AVID||10.05%||12/29/11||2/10/12||43|
|SC 13D||STARBOARD VALUE LP||AOL||85.47%||2/16/12||6/15/12||120|
|SC 13D||STARBOARD VALUE LP||IDTI||40.97%||4/19/12||3/19/14||699|
|SC 13D||STARBOARD VALUE LP||VVI||58.24%||8/23/12||12/19/12||118|
|SC 13D||STARBOARD VALUE LP||ODP||10.41%||9/17/12||3/7/16||1267|
|SC 13D||STARBOARD VALUE LP||QTM||3.60%||11/1/12||11/15/17||1840|
|SC 13D||STARBOARD VALUE LP||CCC||13.41%||1/22/13||5/29/14||492|
|SC 13D||STARBOARD VALUE LP||PRGS||14.77%||3/1/13||3/1/13||0|
|SC 13D||STARBOARD VALUE LP||TQNT||110.15%||4/29/13||3/28/14||333|
|SC 13D||STARBOARD VALUE LP||SFD||7.14%||6/17/13||9/30/13||105|
|SC 13D||STARBOARD VALUE LP||ELX||-7.84%||7/8/13||11/19/13||134|
|SC 13D||STARBOARD VALUE LP||DRI||14.46%||12/23/13||8/15/16||966|
|SC 13D||STARBOARD VALUE LP||RLD||-0.18%||5/2/14||3/22/16||690|
|SC 13D||STARBOARD VALUE LP||MWV||7.51%||6/2/14||7/2/15||395|
|SC 13D||STARBOARD VALUE LP||MCRL||39.27%||8/7/14||8/12/15||370|
|SC 13D||STARBOARD VALUE LP||LXU||-52.53%||11/24/14||11/9/15||350|
|SC 13D||STARBOARD VALUE LP||ISSI||39.89%||11/28/14||12/7/15||374|
|SC 13D||STARBOARD VALUE LP||SPLS||-21.68%||12/11/14||2/6/15||57|
|SC 13D||STARBOARD VALUE LP||NSP||64.47%||1/20/15||8/15/17||938|
|SC 13D||STARBOARD VALUE LP||BCO||54.09%||5/4/15||8/2/17||821|
|SC 13D||STARBOARD VALUE LP||MDAS||15.12%||8/3/15||1/27/16||177|
|SC 13D||STARBOARD VALUE LP||FCPT||44.98%||11/10/15||3/16/16||127|
|SC 13D||STARBOARD VALUE LP||WPP||13.34%||1/25/16||1/25/16||0|
|SC 13D||STARBOARD VALUE LP||MRVL||31.55%||2/3/16||open||1323|
|SC 13D||STARBOARD VALUE LP||ASRT||-24.99%||2/15/16||5/22/18||827|
|SC 13D||STARBOARD VALUE LP||BLOX||105.19%||4/22/16||11/7/16||199|
|SC 13D||STARBOARD VALUE LP||STC||-2.05%||8/12/16||3/21/18||586|
|SC 13D||STARBOARD VALUE LP||PRGO||-1.41%||11/14/16||8/16/19||1005|
|SC 13D||STARBOARD VALUE LP||TRCO||36.93%||2/21/17||3/15/17||22|
|SC 13D||STARBOARD VALUE LP||PRXL||258.18%||5/11/17||6/22/17||42|
|SC 13D||STARBOARD VALUE LP||TYPE||24.81%||10/6/17||2/21/18||138|
|SC 13D||STARBOARD VALUE LP||SCOR||-36.28%||11/6/17||1/17/18||72|
|SC 13D||STARBOARD VALUE LP||MLNX||90.06%||11/20/17||3/12/19||477|
|SC 13D||STARBOARD VALUE LP||CARS||-42.29%||12/18/17||open||639|
|SC 13D||STARBOARD VALUE LP||FCE.A||26.20%||4/4/18||12/11/18||251|
|SC 13D||STARBOARD VALUE LP||WEB||129.80%||6/8/18||10/11/18||125|
|SC 13D||STARBOARD VALUE LP||SYMC||28.95%||8/16/18||open||398|
|SC 13D||STARBOARD VALUE LP||MGLN||-0.61%||12/13/18||open||279|
|SC 13D||STARBOARD VALUE LP||PZZA||34.86%||2/14/19||open||216|
|SC 13D||STARBOARD VALUE LP||GCP||-47.38%||6/6/19||open||104|
|SC 13D||STARBOARD VALUE LP||BOX||19.66%||9/3/19||open||15|
Starboard Value 13Ds: Plan, Path and Value
With $9.58 billion under management, Starboard Value is renowned for its aggressive tactics. Starboard was formed in March 2011, following a spinoff from Ramius. The investment team previously founded and managed the Ramius small cap value and opportunity platform, beginning in 2005. Jeff Smith often describes the firm’s strategy as “plan, path and value” as it assesses opportunities.
From Starboard Value’s ADV filed with the SEC:
(Starboard) seeks investment opportunities (i) that the Adviser believes trade at a significant discount to intrinsic value (“Value”), (ii) for which the Adviser can develop a defined plan to unlock value (“Plan”), and (iii) for which the Adviser believes there is a clear path to implementation of the Plan (“Path”).
The Adviser’s investment strategy…focuses primarily, although not exclusively, on investing in securities of U.S. public companies that the Adviser believes are deeply undervalued by the marketplace and likely to experience a significant appreciation in value as a result of operational improvements or a change in ownership, corporate direction or management or improved corporate governance…
(Starboard) seeks to be the catalyst for the creation of Value through the formation and implementation of a Plan, which is generally focused on improving the target company’s cash flow in the near to medium term. The Adviser’s preferred Path to implementation of the Plan is typically to work constructively with the issuer’s management and board of directors, but, if necessary, the Adviser is generally prepared to move more forcefully, including by securing the appointment of persons to the company’s management team or board of directors and may also, either alone or as part of a group, initiate shareholder actions seeking to maximize value. The Adviser continually evaluates each element of the Value, Plan and Path of each investment in order to test its investment thesis and seeks to reduce or exit positions in which it believes there is no longer a clear Plan or Path to achieve Value.
Starboard’s Jeff Smith: “We love to pounce.”
In an April 2019 CNBC interview, Jeff Smith said: “…we love to pounce. So, we follow a lot of companies where we believe we have a plan that we can do something different at those companies and we have a path where shareholders would support change at those companies. And then we’re watching value. So how is the value changing? It changes every day. When you get in a volatility event in the market or in a stock specifically and the stock comes down, we love to be able to pounce.”
Not all of Smith’s activist campaigns begin with Starboard Value 13Ds
I’ll point out that not all of Starboard Value’s activist campaigns begin with a 13D filing. In many cases, Jeff Smith has disclosed positions, and made demands of management, despite not owning 5%+ of a company. For instance, on April 16, 2019 Smith disclosed at an investment conference that Starboard had a position in automobile auction house KAR Auction Services (KAR). The stock closed at $20.69 that day, up $2.58. But no 13D filing by Starboard was forthcoming. A month later when Starboard filed its Q1 13F report of holdings, we learned that the fund had a 6,776,730 share position in KAR. That’s a 3.22% stake, making KAR Starboard’s #11 largest position.
However, Starboard’s most recent Q2 13F, released on August 14, showed that Smith had sold all but 84,000 shares of KAR. A very nice trade on his part — and he avoided 13D regulatory filings. And it was a profitable trade for investors who bought on April 16 and sold on the 13F disclosure of a reduced stake, when the stock was at $25.10. That’s a 21% followers’ return over about four months. About a 116% annualized return. Indeed, an analysis of Starboard’s <5% positions disclosed by Smith suggests returns as good, if not better, than trading based on Starboard’s 13D filings.
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