Long Term Returns of Jeff Smith’s Activist Targets
In this article, we discuss long-term returns of Jeff Smith's activist targets. If you want to see more stocks in this selection, check out Long Term Returns of Jeff Smith's 5 Activist Targets.
Once dubbed as one of the most feared men in corporate America, Jeff Smith is one of the most respected personalities when it comes to activist investment. He has been making waves since forming Starboard Value in 2002 and helping steer the hedge fund to becoming one of the biggest and most followed. The hedge fund has overseen more than 100 activist campaigns tailored to maximizing shareholder value.
Smith has risen to become one of the most revered activist investors thanks to his keen eye for detecting unrealized company potential. His strategy is simple as it involves building stakes in undervalued companies and pushing for management changes, sale of units, or company improvement in capital utilization in the race to unlock value.
In most cases, the activist investor collaborates with management to get them to perform better and focus on core business instead of launching a proxy battle. Smith's impressive record is depicted by the fact that 80% of Starboard Activist campaigns are profitable.
The hedge fund also delivered average annualized returns of over 15% through 2014 from inception. Therefore, following the activist investor's plays on Wall Street usually pays out. The hedge fund has registered 37% portfolio gains since 2013 and delivered a 3.82% average return over the past three years.
The economics graduate from the Wharton School of the University of Pennsylvania is best remembered for steering a campaign that resulted in the ousting of the entire board of Darden Restaurants. Before ousting the board, the activist investor had filed hundreds of documents showcasing how management could improve earnings and garner more value from corporate assets.
Within the short period of ousting the entire Darden's board, the new management achieved a $100 million annualized cost savings. In the next two years, the activist investor would play a pivotal role, resulting in a 40% increase in the company's market value.
Smith also sought to turn around the fortunes of struggling Pizza chain Papa John's, taking a stake in the company and becoming the chairman in 2019. He was given two seats on the board. The company's stock jumped by 9.9% as investors remained optimistic about the activist investor's ability to reinvigorate the pizza chain delivery fortunes,
The billionaire investor has also run campaigns in eBay where he pushed to have the company divest some units and return the proceeds to investors through buybacks and dividends. The campaigns suggest that activist campaigns tend to have positive long-term returns after interventions, considering that eBay shares rallied by more than 90% following the transaction.
Jeffrey Smith has also taken up activist stakes in software company Salesforce, Inc. (NYSE:CRM) and has seen his stakes surge by over 70%. During the pandemic, he actively called for drastic changes at Kohl's and Mercury Systems in the race to unlock value.
Our Methodology
Smith has had one of the longest and most successful careers as an activist investor and portfolio manager at Starboard Value. Having overseen over 100 campaigns with an 80% success rate, he ranks higher in pursuing strategic alternatives that can maximize shareholder value. We have prepared a list of some of the most significant campaigns he led based on SEC filings. We have also computed the long-term profits they generated compared to the S&P 500 earnings. The campaigns are ranked in chronological order.
Long Term Returns of Jeff Smith's Activist Targets
25. Darden Restaurants, Inc. (NYSE:DRI)
Activist Investment: 2013
Long Term Returns: 200%
S&P 500 Gain: 150%
Darden Restaurants, Inc. (NYSE:DRI) operates full-service restaurants in the US and Canada through its subsidiaries. It operates under Olive Garden, Longhorn Steakhouse, Cheddar's Scratch Kitchen, Yard House, and The Capital Grille brands. The restaurant chain rose to prominence in 2013 when activist investor Starboard Value acquired stakes and triggered one of the fiercest and most successful activist campaigns.
Smith accomplished something that no one had ever achieved on Wall Street, taking complete control of the company while owning less than an 8.5% stake. He went on to replace the entire board of directors and assume the role of chairman.
After handpicking the board, he chose the CEO and embarked on a successful run of transforming the company's fortune. Under his tenure, the restaurant chain implemented operational improvements, divested non-core assets, and reduced costs by over $100 million while returning value to shareholders.
What followed was Darden Restaurants, Inc. (NYSE:DRI) stock appreciating by over 300%, emerging as one of the most successful activist campaigns by Starboard value.
24. LSB Industries, Inc. (NYSE:LXU)
Activist Investment: 2014
Long-term returns: -80%
S&P 500 Gain: 57%
LSB Industries, Inc. (NYSE:LXU) is a company that manufactures, markets, and sells chemical products. It specializes in providing nitrogen-based fertilizer and urea ammonia nitrate for fertilizer and fertilizer blends. Starboard Value first got involved with the company in 2014, purchasing 9.9% of outstanding shares.
The activist investor started pushing for changes such as operational efficiency, selling non-core assets, and enhancing its corporate governance. The company sought to avert a proxy fight by agreeing to split its climate control and chemical businesses in 2015. It also agreed to expand its board, among other concessions. Starboard agreed to vote its entire share in favor of the board of director's recommendation.
LSB Industries, Inc. (NYSE:LXU) faced many challenges, including rising costs, declining demand, and operational issues. The company must also complete the site expansion project at the El Dorado facility. Starboard sold its entire stake in the company in 2020 and is believed to have incurred a $100 million loss.
23. Insperity, Inc. (NYSE:NSP)
Activist Investment: 2015
Long-term returns: 80%
S&P 500 Gain: 95%
Insperity, Inc. (NYSE:NSP) helps small and medium-sized businesses perform better by providing them with human resource and business solutions. In 2015, Starboard Value disclosed a 13.2% stake in the company, insisting that the company was deeply undervalued while there were several opportunities with the potential of creating significant shareholder value.
The activist investor urged the company to consider several options to improve performance by reducing corporate expenses, improving capital allocation governance, and exploring all available alternatives to maximize shareholder value.
Starboard Value also told CEO Paul Arvada to consider selling some of Insperity, Inc. (NYSE:NSP)'s private jets and consider selling the company. Mr. Smith insisted that selling two of the company's corporate jets would generate $92 million in profits.
The activism campaign has yielded some fruits, as Insperity's share price exploded by more than 250% between 2017 and 2021. The hedge fund generates a profit of about $500M from the investment.
22. The Brink’s Company (NYSE:BCO)
Activist Investment: 2015
Long-term returns: 50%
S&P 500 Gain: 41%
The Brink’s Company (NYSE:BCO) provides secure transportation, cash management, and other security-related services. It offers armored vehicle transportation of valuables and automated teller machine management services. Starboard Value confirmed a 9% stake in the count in July 2015 and increased to 12.4% by year-end.
With the investment, the activist investor started advocating for changes, key among them urging The Brink’s Company (NYSE:BCO) to improve its route logistics operations. The company reached an agreement with the activist investor that resulted in the addition of three new dissident board members.
After that, the Brink's Company (NYSE:BCO) came under pressure to take necessary steps to improve its business and share price failure, which would be to push for a sale of a significant division. The company succeeded in several strategic and operational initiatives that improved profitability and competitiveness. Consequently, its share price increased by more than 250% between 2016 and 2021. The activist investor is believed to have made a profit of about $400 million from the investment
21. Perrigo Company plc (NYSE:PRGO)
Activist Investment: 2015
Long-Term Returns: -80%
S&P 500 Gain: 48%
Perrigo Company plc (NYSE:PRGO) provides over-the-counter health and wellness solutions to enhance individual well-being. The company operates through Consumer Self-Care Americas and Consumer Self-Care International segments. Smith first bought stakes in the company in 2015.
In 2016, the activist investor called out management for a lack of focus and execution that had left its core over-the-counter business undervalued. The investor took issue with how the company's stock had fallen since its attempted takeover of EpiPen maker Mylan. Nevertheless, he remained confident about the company's strong business and many valuable assets.
The activist investor played a key role in shaking up the company's board and pressing it to conduct a strategic review of its generic business. In 2017, the activist investor would secure three seats on the board to help play a key role in plotting its future.
Investment in Perrigo Company turned out differently than expected, as the stock imploded by 80% between 2016 and 2020, resulting in a loss of about -$200 million for the activist investor.
20. Box, Inc. (NYSE:BOX)
Activist Investment: 2015
Long Term Returns: 40%
S&P 500 Gain: 97%
Box, Inc. (NYSE:BOX) provides a cloud-based content management platform, allowing organizations of all sizes to conveniently access and distribute their content across any device, from any location. Smith and his Starboard Value hedge fund confirmed a significant position in the company in 2017. The expectation was high that the activist investor would launch an M&A-focused campaign.
In 2021, the activist investor started a campaign to nominate directors to the board, reiterating that the company had fallen short of meeting profitable growth expectations. The investor with a 7.7% stake also reiterated that the company needed to capitalize on the work-from-home trend during the pandemic as many of its cloud computing peers.
Proxy filings also indicated that the company had been trying for seven months to get CEO Aaron Levie removed from his leadership role. The activist investor also urged management to boost margins and seek a potential buyer.
The company would bow to pressure and agree to make board changes after an agreement with the activist investors in a bid to end a proxy contest.
19. Marvell Technology, Inc. (NASDAQ:MRVL)
Activist Investment: 2016
Long-term returns: 300%
S&P 500 Gain: 43%
Marvell Technology, Inc. (NASDAQ:MRVL) is a company that provides data infrastructure semiconductor solutions spanning the data center business. Activist investor Starboard confirmed a 7% stake in the company in 2016. With the announcement, the activist investor started a campaign to have the company cut costs and exit its mobile wireless business.
The push came after the semiconductor company had announced plans to slash about 17% of its workforce and trim mobile business to focus on automotive technologies and the Internet of Things. In addition, the company reached an agreement that saw it reshuffle its board, bringing new directors into the fold following calls for changes by the activist investor.
Peter Feld, a Starboard managing member, and Rick Hill, a former CEO and director at Novellus Systems Inc., joined the board. CEO Sehat Sutardja was also forced to step down. The major management changes made the impression that the company was to become a proper acquisition target. However, that was not the case, as the company rejected some offers deemed relatively low.
Instead, the activist investor pushed for significant improvement in operating performance, revenue growth, and profitability. Marvell Technology, Inc. (NASDAQ:MRVL) did rally by more than 200% between 2016 and 2020, resulting in long-term returns of about $1B for the activist investor.
18. ComScore, Inc. (NASDAQ:SCOR)
Activist Investment: 2016
Long-Term Returns: -90%
S&P 500 Gain: 45%
ComScore, Inc. (NASDAQ:SCOR) provides information and analytics on how audiences, consumers, and advertisers interact with various media platforms. The company offers ratings and planning products and services. Activist investor Starboard Value first bought stakes in the company in 2016, owning more than 5% of the company's stakes.
The hedge fund would kick start a proxy contest 2017 urging the company to hold an annual meeting to elect directors. The company was under immense pressure after revealing insufficient public disclosures about its performance. It was also struggling with financial troubles.
The investment in ComScore, Inc. (NASDAQ:SCOR) was a disaster, as the stock price imploded by more than 90% between 2016 and 2020. Smith sold most of the stakes in 2020, having made a loss in the range of $100M.
17. Stewart Information Services Corporation (NYSE:STC)
Activist Investment: 2016
Long-term returns: 80%
S&P 500 Gain: 30%
Stewart Information Services Corporation (NYSE:STC) is a company that provides title insurance and real estate transaction-related services. Its Title Segment searches, examines, closes, and insures the condition of the title to real property. Starboard Value took out stakes in the company in 2016 and increased to 9.5%, making it one of the largest shareholders.
The activist investor started pushing for changes in the company to improve operational efficiency and enhance corporate governance. In October of the same year, the company struck a deal and agreed to allow the activist investor to nominate three members to its board.
The three board seats put the hedge fund in a position to steer Stewart Information Services Corporation (NYSE:STC) into improving its corporate governance structure to benefit all shareholders. His efforts paid off as the stock appreciated by 25% between 2018 and 2020, with the company improving its profitability and competitiveness. By December 2020, Starboard had amassed a profit of $around $100 million on the stock.
16. Cars.com Inc. (NYSE:CARS)
Activist Investment: 2018
Long Term Returns: 140%
S&P 500 Gain: 50%
Cars.com Inc. (NYSE:CARS) operates a digital marketplace for the automotive industry. Its platform helps connect car shoppers with sellers by enabling car dealers and manufacturers to connect with shoppers. Starboard Value first bought stakes in the company in 2018, terming the company as undervalued.
Nevertheless, the activist investor would call on the company to improve its performance and consider selling itself or making management changes as one of the ways of unlocking value. In March, the two parties reached an agreement that saw the activist investor allocate three board seats.
In return, Cars.com Inc. (NYSE:CARS) was expected to announce revenue and margin targets over the next three years. The activist investment paid off as Cars.com stock soared by more than 300% between 2020 and 2021, and the company started paying dividends and buying back profits. The investor is believed to have made a profit of $300 million from the investment when it exited in 2021.
15. eBay Inc. (NASDAQ:EBAY)
Activist Investment: 2018
Long Term Returns: 160%
S&P 500 Gain: 38.5%
eBay Inc. (NASDAQ:EBAY) is an internet company that operates a marketplace platform that connects buyers and sellers. The platform includes an online marketplace, eBay.com, and eBay suite for mobile apps. The e-commerce giant was targeted in 2018 after Starboard Value built a significant position in the stock, with Elliot Management also confirming a $1.4 billion stake.
With the investments, the activist investors urged the company to consider a spinoff of StubHub and a portfolio of other classified properties to unlock more shareholder value. eBay Inc. (NASDAQ:EBAY) would bow to pressure and sold the StubHub unit for $4 billion and its classified units for $9.2 billion. A good chunk of the money was returned to shareholders through buybacks and dividends. In 2020, the activist investor trimmed its stakes in the e-commerce company by 70% after pushing for the auction of non-core businesses.
14. Papa John’s International, Inc. (NASDAQ:PZZA)
Activist Investment: 2019
Long-term returns: 156%
S&P 500 Gain: 14%
Papa John’s International, Inc. (NASDAQ:PZZA) is a company that operates and franchises pizza delivery and carryout restaurants under the Papa John's trademark. Activist investor Starboard Value started building a position in the company in 2019 and advocated for management changes in the race to unlock value.
Papa John’s International, Inc. (NASDAQ:PZZA) jumped by 9.9% after it emerged hedge fund Starboard Value was taking a $250 million investment in the company. In addition to the investment, the hedge fund CEO Jeffrey Smith became the Pizza chain chairman. The $250 million investment marked the start of a new battle between Papa John's and former CEO John Schnatter, who was seeking to regain control of the pizza delivery company.
In 2019, Papa John’s International, Inc. (NASDAQ:PZZA)'s sought to sell it but abandoned the plans after failing to receive offers that met its expectations. The activist investor helped steer the company to make significant progress on customers' experience financial performance, share price performance, and corporate governance. The company ended up announcing a $425 million share repurchase program in 2020 and bought a significant chuck of shares owned by the activist investor.
Smith stepped down as board chairman in March 2023, having sold most of the stakes in 2021. Long-term returns in the stock topped $300 million, and the company's stock has soared more than 150% between 2019 and 2021.
13. Pediatrix Medical Group, Inc. (NYSE:MD)
Activist Investment: 2019
Long-Term Returns: 40%
S&P 500 Gain: 74%
Pediatrix Medical Group, Inc. (NYSE:MD) is a healthcare company providing newborn maternal-fetal, cardiology, and other pediatric care services. It also offers neonatal care services; Starboard Value acquired 9.9% stakes in the company in 2019 and started a proxy contest in the race to unlock value.
The hedge fund started by nominating a majority of directors at Mednax. It also started pushing for the company to sell all or part of itself as one of the ways of unlocking value. Amid the swirling activist pressure, Pediatrix Medical Group, Inc. (NYSE:MD) started taking steps to refocus its business and flatten its organizational structure. It also sold its management's services business MedData to Frazier Healthcare Partners.
In 2020, Pediatrix Medical Group, Inc. (NYSE:MD)'s founder, chief executive officer, and several board members were ousted after Starboard Value started pressing for changes. The management changes came as the activist investor pushed to sell the company's Radiology solutions business.
12. Acacia Research Corporation (NASDAQ:ACTG)
Activist Investment: 2019
Long Term Returns: 140%
S&P 500 Gain: 73%
Acacia Research Corporation (NASDAQ:ACTG) is a company that invests in intellectual property and related absolute return assets. The company engages in the licensing and enforcement of patented technologies. Activists Investor Starboard Value first disclosed stakes in the company in 2019, insisting it intended to engage in discussions with the management and board on various matters, including business operations, strategy governance, and capitalization.
The activist investor provided the company with a $35 million Investment, thereafter acquiring 350,000 shares of Series A convertible preferred stock. As of the end of 2022, the investor had acquired 5 million shares for an 11.50% stake, which rose to 20 million shares or 34.2% stake as of 2023.
In 2022, Acacia Research Corporation (NASDAQ:ACTG) reached an agreement with the activist investor and agreed to streamline its capital structure and further strengthen its financial position. The company also confirmed that the CEO, Clifford Press, is to resign as CEO and board position, having overseen the company's transformation.
11. Commvault Systems, Inc. (NASDAQ:CVLT)
Activist Investment: 2019
Long Term Returns: 12.4%
S&P 500 Gain: 47%
Commvault Systems, Inc. (NASDAQ:CVLT) is a company that provides a data protection platform that helps customers secure, defend, and recover data. It offers Commvault backup and Recovery, a backup and recovery solution. The company was targeted in 2019 by Starboard Value, which insisted that the company was highly undervalued.
The activist investor built a 9.3% stake in Commvault Systems, Inc. (NASDAQ:CVLT), with portfolio Manager Smith insisting on the need to seek operational changes in the race to unlock maximum shareholder value in the company. Tussle would ensue that would only be settled after the data management software maker agreed to give the activist investor three seats on the board to end a two-month-long proxy contest.
With the board seats, the activist investor reiterated that its focus was to help Commvault Systems, Inc. (NASDAQ:CVLT) perform better.
10. Merit Medical Systems, Inc. (NASDAQ:MMSI)
Activist Investment: 2020
Long-Term Returns: 26.5%
S&P 500 Gain: 45%
Merit Medical Systems, Inc. (NASDAQ:MMSI) stands as a prominent producer of exclusive disposable medical devices utilized in interventional diagnostic and therapeutic processes. Activist investor Starboard Value started building a position in the company in 2020 and announced plans to meet with management and discuss ways to improve performance.
The activist investor built a 9% stake in Merit Medical Systems, Inc. (NASDAQ:MMSI), insisting its shares were highly undervalued while at their lowest level in three years. In May 2020, the company reached an agreement with Starboard Value pursuant to the company nominating three new independent directors.
9. ACI Worldwide, Inc. (NASDAQ:ACIW)
Activist Investment: 2020
Long Term Returns: 29.1%
S&P 500 Gain: 37.80%
ACI Worldwide, Inc. (NASDAQ:ACIW) is a software company that provides real-time patent solutions to corporations. Its mission-critical real-time payment solutions enable corporations to process and manage digital payments and power Omni commerce payments.
Activist investor Starboard Value confirmed a 9% stake in the software company in 2020 while reiterating that there are operational and strategic opportunities to create value. The investment came after ACI Worldwide, Inc. (NASDAQ:ACIW)'s shares had lost 17% in value and were undervalued based on the hedge fund valuation.
The activist investor reiterated that ACI Worldwide, Inc. (NASDAQ:ACIW) had underperformed its peers, including FireEye and Commvault Systems. Starboard Value said it may propose various changes that could include board changes or a strategic review aimed at turning around the company's fortunes.
8. Green Dot Corporation (NYSE:GDOT)
Activist Investment: 2020
Long Term Returns: 47.4%
S&P 500 Gain: 45%
Green Dot Corporation (NYSE:GDOT) is a financial technology company that provides financial services to consumers and businesses in the United States. The company functions via three divisions: Consumer Services Business, Business Services, and Money Movement Services. Starboard Value reported a significant position in the company in 2020 amid a leadership change.
Known for operational or corporate governance changes, the activist investor approved the appointment of Daniel R. Henry as the CEO in March. The endorsement resulted in Green Dot Corporation (NYSE:GDOT)'s shares jumping 13%
"We believe that Mr. Henry has the requisite skill set and industry experience to lead the transformation at Green Dot and focus on reinvigorating growth and improving profitability," Starboard Value LP said.
7. eHealth, Inc. (NASDAQ:EHTH)
Activist Investment: 2021
Long Term Returns: 16.4%
S&P 500 Gain: 27.6%
eHealth, Inc. (NASDAQ:EHTH) operates a health insurance marketplace that provides consumer engagement medication and health insurance enrollment solutions. Its Medicare segment offers the sale of Medicare-related health insurance plans. The family and small business segment is involved in marketing health insurance plans tailored for individual families and small businesses.
In April 2020, Starboard Value revealed ownership of a 9.8% share in eHealth, an internet-based health insurance marketplace. The investment firm advocated for alterations within the company's board, approach, and financial performance. By June 2020, Starboard Value and eHealth came to an agreement, resulting in modifications. This agreement led to the appointment of two fresh directors to the board, one of whom was Scott Flanders, the CEO of eHealth.
In 2021, Starboard Value snapped up stakes in the company, reiterating that eHealth, Inc. (NASDAQ:EHTH)'s stock was undervalued. The activist investor opened the discussion with management and the board as it sought to pursue strategic alternatives to unlock value.
A proxy battle would ensue in early 2021, with Starboard Value pushing for four slots on the company's board. The health insurance company tried to sidestep the proxy contest by giving the activist investor one board seat two months after the investor nominated four directors.
6. Huntsman Corporation (NYSE:HUN)
Activist Investment: 2021
Long Term Returns: 23.1%
S&P 500 Gain: 27.6%
Huntsman Corporation (NYSE:HUN) is a company that manufactures and sells diversified organic chemical products. It operates under three segments: Polyurethanes, Performance Products, and Advanced Materials. The company attracted interest from activist investor Starboard Value in 2021 with an 8% stake.
With the investment, the activist investor started agitating for changes at the chemical producer, insisting it needed to shake up to improve its performance. The challenge started with the activist investment firm pushing for four seats on the specialty chemical board. Activist investor Smith wrote a letter touting Huntsman Corporation (NYSE:HUN)'s CEO record of overpromising and under-delivering, which had led to investor skepticism.
The CEO hit back, insisting that the activist investor was more concerned with installing its handpicked candidates to the board instead of allowing the management team to create shareholder value. Starboard Value would fail in its attempt to replace four directors, resulting in shares of the specialty company tumbling. The defeat marked the second loss of shareholder value for the activist investor in less than a year.
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Disclosure: None. Long Term Returns of Jeff Smith's Activist Targets is originally published on Insider Monkey.
