Starboard Value LP is an activist hedge fund focused on investing in underperforming public companies in order to drive changes and boost shareholder value. Founded in 2002 by Jeffrey Smith, Starboard has deployed over $8 billion of capital targeting companies across sectors like technology, industrials, consumer products, and healthcare. Some of Starboard’s prominent activist campaigns have included Yahoo, Darden Restaurants, Commvault Systems, and Papa John’s Pizza. However, Starboard’s overall performance record has been mixed compared to benchmarks.
Starboard’s activist approach focuses on shaking up management and strategy of target companies
Starboard Value employs an aggressive activist approach, building significant ownership stakes in public companies viewed as undervalued and mismanaged. The hedge fund then pushes for major changes like replacing CEOs and board directors, divesting assets, and overhauling business strategy. Some of Starboard’s most aggressive moves have included completely replacing Darden’s board and ousting Papa John’s founder John Schnatter as chairman.
Starboard has achieved success in certain activist campaigns
Starboard has successfully shaken up management at a number of prominent companies. For example, it replaced Yahoo’s entire board in 2016 after taking a 1.7% stake and pushed for the sale of Yahoo’s core business to Verizon. Starboard also replaced Darden’s entire board in 2014, leading to improved earnings. Other wins include Commvault, Brinks, and Perrigo.
However, financial returns from activism have been inconsistent
While Starboard has succeeded operationally in some activist situations, its overall financial track record has been inconsistent. According to data provider Insightia, Starboard’s flagship fund returned 5.7% annualized from 2011-2020 compared to a 13.2% annualized return for the S&P 500 over the same period. Critics argue Starboard and activists often leave their target companies in a damaged state after drastic changes.
Starboard Value is known for its aggressive shareholder activism targeting undervalued public companies across sectors. But despite some high-profile activist victories, Starboard’s overall financial returns have lagged market benchmarks – indicating a mixed performance track record from its investment strategy.