It has been a busy year for activist-investor Jeffrey Smith of Starboard Value, which makes his presentation at next week's Sohn Investment Conference in New York all the more intriguing. Smith has a tendency of announcing new positions in well-known companies at investor conferences -- but then again, he has a pretty full plate already.
Starboard describes itself as a firm that invests in undervalued companies and actively engages with management to unlock shareholder value. That's putting it mildly. Its recent targets -- or, ongoing battles -- include Yahoo (YHOO), Depomed (DEPO), Macy's (M), Advance Auto Parts (AAP) and Darden Restaurants (DRI). Smith has a track record of gaining board seats and making changes to management.
This week alone, Smith has made headway with Yahoo and Depomed. Earlier this month Smith resigned as chairman of Darden's board, saying that he is now able to move to other projects due to the "outstanding chemistry and capabilities" of Darden's revitalized board and management team.
On Wednesday, Yahoo announced that it reached an agreement with the hedge fund and that it will allow four Starboard-designees, including Smith, to sit on its soon-to-be 11-person board. Smith will also have a seat on the board's strategic review committee.
In a letter dated March 24, he requested nine seats on the troubled-tech company's board. (At the time of the letter, Yahoo's board was comprised of nine members.) Starboard, which has a 1.7% stake in Yahoo, said that Yahoo's current board has failed to serve shareholders and that the company needs to have a board in place that will hold management accountable in its turnaround plans.
"I am pleased that we were able to reach a constructive agreement with Yahoo to add new independent directors to the Yahoo Board," Smith said in a prepared statement Wednesday. "We look forward to getting started right away and working closely with management and our fellow board members, with the common goal of maximizing value for all shareholders."
With significant progress underway on Yahoo, what will Smith's next move be?
Earlier this month, Smith announced a 9.8% stake in Depomed, a specialty pharmaceutical company that focuses on pain relief drugs. He came out swinging on this position. In a letter addressed to Depomed's CEO James Schoeneck, Smith requested a special meeting to overhaul the company's board.
Smith criticized the current board's corporate governance, "questionable capital allocation decisions" and "egregious" actions it has taken to maintain control over the company and block acquisitions, which could have been beneficial for shareholders. On Monday, Depomed issued a letter in which it said Starboard has 30 days to request a special meeting of shareholders, which is expected to occur between June 1 and June 25. Shares of Depomed are up nearly 15% since Starboard announced its position.
However, if Smith maintains his tendency of announcing new positions, it is possible that he may speak of Infoblox (BLOX) at next week's conference. Starboard's 7% stake in the network-services company was announced via a Securities and Exchange Commission filing on April 22, but little else has been said of the holding since. The filing stated that although Starboard believes shares of the company are undervalued, it so far has no proposals for the company.
Of course, that may change. Earlier this month, Infoblox's head of sales left the company due to what analysts at JMP Securities said were likely "cultural differences." Infoblox's CEO will be fulfilling the duties of the head of sales in the interim. Shares of the company are down nearly 10% year to date, but have been on an upswing in recent days.
As Smith hasn't discussed Infoblox yet, it's possible it may be the subject of next week's presentation. Of course, he could also surprise us with something new.
The Sohn Investment Conference, which will be held in New York on May 4, 2016, brings together some of the top minds in the financial world for a day of sharing invest ideas. It is held in honor of Ira Sohn, a Wall Street professional who lost his battle with cancer when he was 29. Proceeds from the New York conference, as well as other conferences the Sohn Conference Foundations holds, are dedicated to the treatment and cure of pediatric cancer and other childhood diseases. The foundation has so far raised more than $65 million.