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Starboard Value is an American
hedge fund A hedge fund is a pooled investment fund that trades in relatively liquid assets and is able to make extensive use of more complex trading, portfolio-construction, and risk management techniques in an attempt to improve performance, such as ...
that was founded in 2002 by Jeffrey Smith and Mark Mitchell with Smith serving as CEO.Butt, Rachel; Here are the 10 biggest activist money managers and some of their most impressive bets; Business Insider; June 17, 2016; http://nordic.businessinsider.com/top-10-biggest-activist-investors-2016-6?r=US&IR=T


History

Starboard Value began as part of Ramius Capital in 2002. Peter Feld joined Smith and Mitchell in 2005. Starboard Value merged with the Cowen Group in 2008, and was Cowen's hedge-fund until 2011, when it went independent. Smith, Mitchell, and Feld all stayed with Starboard.


Structure

Starboard has a five-member board of directors. As of February 2019, the five directors were John Leonard, chief executive officer of Intellia Therapeutics; Jeffrey Smith, Starboard's own chief executive officer; Janet Vergis, chairman of the board at
Amneal Pharmaceuticals Amneal Pharmaceuticals, Inc. is an American publicly traded generics and specialty pharmaceutical company. The company is headquartered in Bridgewater, New Jersey. History Amneal Pharmaceuticals was founded in 2002 by brothers Chirag and Ch ...
; James Tyree, chairman of Tyree & D'Angelo Partners; and Steven Shulman, managing partner of Shulman Family Ventures.


Investments and activist campaigns

In 2011, Starboard won seats on the boards of SurModics, a maker of biopharmaceuticals, and
Regis Regis or Régis may refer to: People * Regis (given name), a given name (including a list of people with the name) * Regis (surname), a surname (including a list of people with the name) * Regis (musician), full name Karl O'Connor, an English ...
, a chain of hair-cutting salons. In December 2011, Starboard sought to gain seats on AOL's board, charging that the firm's CEO,
Tim Armstrong Timothy Ross Armstrong (born November 25, 1965) is an American musician, singer, songwriter and producer. Known for his distinctive voice, he is the singer/guitarist for the punk rock band Rancid and hip hop/punk rock supergroup Transplants. ...
, was "wasting money by funding the losses at Patch, a network of local-news websites," and calling on Armstrong to "return to shareholders much of the more than $1 billion it received from the sale of its patents to
Microsoft Microsoft Corporation is an American multinational corporation, multinational technology company, technology corporation producing Software, computer software, consumer electronics, personal computers, and related services headquartered at th ...
in 2012." Although Starboard lost a proxy battle six months later, Armstrong followed Starboard's advice, spinning off Patch and returning the $1 billion from Microsoft to its shareholders. Consequently, the value of Starboard's AOL stock more than doubled. After accumulating a 15% stake in
Office Depot The ODP Corporation is an American office supply holding company headquartered in Boca Raton, Florida. The company has combined annual sales of approximately $11 billion, and employs about 38,000 associates with businesses in the United States. ...
, Starboard asked for its CEO, Neil Austrian, to be fired, and urged that the firm complete its merger with
Office Max OfficeMax is an American office supplies retailer founded in 1988. It is now a subsidiary of The ODP Corporation, which is headquartered in Boca Raton, Florida. As of December 2012, OfficeMax operated 941 stores in 47 states, Puerto Rico, the U ...
. Office Depot gave Starboard three board seats. Starboard also called for a merger between Office Depot and Staples, but the Federal Trade Commission ruled against it for
anti-trust Competition law is the field of law that promotes or seeks to maintain market competition by regulating anti-competitive conduct by companies. Competition law is implemented through public and private enforcement. It is also known as antitrust l ...
reasons, and a judge agreed with the FTC's verdict. In November 2017, Starboard Value took a 10.7% stake in
Mellanox Technologies Mellanox Technologies Ltd. ( he, מלאנוקס טכנולוגיות בע"מ) was an Israeli-American multinational supplier of computer networking products based on InfiniBand and Ethernet technology. Mellanox offered adapters, switches, softwa ...
, an Israeli semiconductor firm. Asserting that Mellanox was spending too much on research and development and other expenses, Starboard urged the company to improve its margins. In January 2018, Starboard Value tried to remove the entire Mellanox board. In December 2017, Starboard Value bought a 9.9% stake in
Cars.com Cars.com is an automotive classified website focused on the United States that launched in June 1998 and now is the second largest automotive classified site. Its headquarters are located in Chicago, Illinois. History A 2003 ''Library Journal ...
, which it considered to be undervalued and potentially salable. In August 2018, Starboard Value disclosed that it had accumulated a 5.8% stake in Symantec and had nominated five directors to Symantec's board. Symantec responded that it was evaluating the Starboard nominations and had not yet scheduled its 2018 Annual Meeting. In September 2018, Symante
announced
that three nominees of Starboard were joining the Symantec board, two with immediate effect (including Starboard Managing Membe
Peter Feld
and one following the 2018 Annual Meeting of Stockholders. In addition, Starboard has taken activist positions in
Smithfield Foods Smithfield Foods, Inc., is an American pork producer and food-processing company based in Smithfield, Virginia, in the United States, and an independent subsidiary of WH Group. Founded in 1936 as the Smithfield Packing Company by Joseph W. Luter ...
,
Calgon Carbon Calgon Carbon Corporation is a Pittsburgh, Pennsylvania based company that manufactures and markets products that remove contaminants and odors from liquids and gases, both for industrial, municipal, and consumer markets. Calgon Carbon's product l ...
, Tessera Technologies,
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, Brink's Home Security,
Macy's Macy's (originally R. H. Macy & Co.) is an American chain of high-end department stores founded in 1858 by Rowland Hussey Macy. It became a division of the Cincinnati-based Federated Department Stores in 1994, through which it is affiliated wi ...
, Darden Restaurants, and
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.


Darden takeover

In October 2014, after what William D. Cohan of ''Fortune'' Magazine described as a "brilliantly executed campaign" involving "withering public criticism" of the firm's leadership and "careful courtship" of its major shareholders, Smith effectively took control of Darden Restaurants, a Fortune 500 company that owns
Olive Garden Olive Garden is an American casual dining restaurant chain specializing in Italian-American cuisine. It is a subsidiary of Darden Restaurants, Inc., which is headquartered in Orange County, Florida. As of 2012, Olive Garden restaurants accoun ...
and
Longhorn Steakhouse LongHorn Steakhouse is an American casual dining restaurant chain owned and operated by Darden Restaurants, Inc., headquartered in Orlando, Florida. As of 2016, LongHorn Steakhouse generated $1.6 billion in sales in its 559 locations. Hist ...
. Among Smith's criticisms was that the pasta at Olive Garden was inadequately salted. On the HBO program
Last Week Tonight A last is a mechanical form shaped like a human foot. It is used by shoemakers and cordwainers in the manufacture and repair of shoes. Lasts typically come in pairs and have been made from various materials, including hardwoods, cast iron, and ...
, host
John Oliver John William Oliver (born 23 April 1977) is a British-American comedian, writer, producer, political commentator, actor, and television host. Oliver started his career as a stand-up comedian in the United Kingdom. He came to wider attention ...
did a three-minute comedy bit based on Starboard's presentation. As of February 1, 2018, it had been seen by nearly four million viewers. While owning less than 10% of the firm, Smith replaced the entire board and became Darden's chairman. By doing so, wrote Cohan, Smith "fired a shot over the bows of directors everywhere," informing them that shareholders were now in the ascendant, and "managers ignore them at their peril." According to Cohan, "the scope of Smith's triumph with Darden has left jaws hanging open across Wall Street and beyond. Only in a handful of times in the past few years has an activist managed to replace an entire board of directors, and never at a company the size of Darden." After Starboard took over Darden, its stock went up by almost 60%.


Profitability

From 2002 to 2014, Starboard generated annualized returns of 15.5%. Fully 84% of its activist campaigns have been profitable. Since 2004, Starboard has replaced over 80 directors on about 30 boards.


References


External links

*{{official website Financial services companies established in 2002 Investment companies of the United States Investment companies based in New York City Hedge fund firms of the United States