The Morning Brief: Starboard Value Wins Darden Proxy Fight
Bad news for breadstick lovers. Activist hedge fund Starboard Value won its proxy fight against Darden Restaurants, the owner of Olive Garden, as shareholders elected all 12 Starboard-nominated directors to Darden’s board, according to a company announcement.
“The new board is prepared and excited to immediately begin working alongside Darden’s management team to put Darden on track for long-term value creation for all shareholders,” said Jeffrey Smith, CEO of Starboard, in a statement. Smith, who famously railed at the number of breadsticks Olive Garden servers regularly place on tables in a detailed case for boosting value, has been locked in a bitter battle with Darden, although he was unable to prevent the company from earlier selling its Red Lobster chain.
Shares of Civeo jumped 1.63 percent on an otherwise down day on Wall Street after David Einhorn’s Greenlight Capital disclosed it owns 9.9 percent of the stock and called on the company to replace CEO Bradley Dodson. The New York hedge fund firm also urged the company to aggressively return capital to shareholders “through a well-communicated dividend policy” and add debt “to make its capital structure more appropriate for a real estate company.”
Civeo provides workforce accommodations, logistics and facility management services to the natural resource industry. It recently announced plans to re-domicile to Canada. It also said its board considered converting to a real estate investment trust. Civeo was spun off from Oil States International earlier this year at the urging of Greenlight and another activist firm, Barry Rosenstein’s Jana Partners.
Casablanca Capital, the activist hedge fund firm headed by Donald Drapkin and Douglas Taylor said in a regulatory filing that Cliffs Natural Resources Inc. has agreed to reimburse Casablanca $2.55 million for expenses incurred during its successful proxy fight over the summer.
While a number of tech and Internet funds are struggling this year and being periodically whacked by the market’s volatility, one small tech-focused fund is rolling along. The Seligman Tech Spectrum Strategy is up 20 percent through September. The $130 million fund is headed by Paul Wick, who has been running a long-short tech strategy since 2001 and also runs the Columbia Seligman Communications and Information Fund, a $3.7 billion mutual fund. Since 2001, the long-short strategy has compounded at 12.3 percent. This year the hedge fund’s long portfolio has done well with semiconductor, capital equipment and data storage companies. “We’ve had extremely good stock selection,” he says in an interview. On the short side, it did especially well with cyber-security plays FireEye, whose stock plunged from the $90s to the $20s, and Imperva, as well as Barracuda Networks, a security, networking and storage products company. Wick also recently reinstated his short of Twitter, a bet he did well on earlier this year. Of the well-known internet names Wick calls Google “a core holding” with great businesses but describes online real estate company Zillow as a “big hyped job” that has “modest growth left.”