Activist investors have long been polarizing figures, but
the past year has brought to a head the debate over aggressive
investment tactics and their outcomes. Several high-profile
names among them
William Ackman of Pershing Square Capital Management and
Nelson Peltz of Trian Partners are under attack from
the companies they target and some
As a whole, activism hasnt been yielding great results
lately. Stocks targeted by activist investors lost 8 percent in
2015 while the S&P gained 1.4 percent, according to a
review by London-based data provider Activist Insight with U.S.
law firm Schulte Roth & Zabel. In January activist-targeted
stocks suffered their worst month in years, losing 6.1 percent,
Chicago-based Hedge Fund Research reports.
But one headline-grabbing activist investor Jeffrey
Smith, CEO of New Yorkbased Starboard Value
remains hopeful. We do have the benefit of getting
[shareholders] support often, Smith tells
Institutional Investor. Its because they
believe the people were recommending for boards will do a
better job representing the shareholders interests than
existing board members.
Smith, 43, founded the Starboard strategy with Mark Mitchell
in 2002 under the aegis of Ramius, the global
alternative-investment management subsidiary of New
Yorkheadquartered Cowen Group. They added Peter Feld to
the team in 2005. Starboard Value spun off from Ramius in early
2011 and has since operated independently.
Starboard keeps its performance numbers close to the vest,
but a look at recent positions shows mixed results.
Darden Restaurants, owner of the Olive Garden chain and
former owner of Red Lobster, has seen significant growth since
Starboard began putting pressure on its board in late 2013,
reaching a five-year high of more than $75 a share last summer.
After taking a 5.6 percent stake, Smith and Starboard quickly
pushed Orlando, Floridabased Darden to sell Red Lobster,
and in the fall of 2014 they succeeded in replacing all of the
But other targets seem like they have yet to pay off. At
last years Delivering Alpha conference in New York, Smith
Starboard had taken a position in Macys and would
encourage the retailer to sell its real estate. Macys
stock spiked briefly after his July announcement but has since
sunk from $72.80 to $42.32 as of February 23; in its earnings
report for the fourth quarter of 2015, the company hinted at
plans to start unloading property.