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Tessera Technologies Inc. (TSRA): Starboard Value Still Bullish, But Trims Stake By 20% As Stock Appreciates

Last Thursday, Jeffrey Smith’s Starboard Value LP disclosed a reduction in its wage on Tessera Technologies, Inc. (NASDAQ:TSRA). This stake, which has an activist nature, was trimmed by 20%; following the disposal of 989,084 shares, the fund owns 3.76 million shares of Common Stock, which represent 7.1% of the company’s outstanding stock.

Starboard Value LP is a New York City-based hedge fund sponsor, founded in March 2011, as a spin-off from Ramius. The investment strategy goes back to 2002, when Jeff Smith and Mark Mitchell founded it. They were later joined, in 2005, by Starboard’s third Managing Member, Peter Feld. According to their own site, “Starboard invests in deeply undervalued companies and actively engages with management teams and boards of directors to identify and execute on opportunities to unlock value for the benefit of all shareholders.”

Jeff Smith

Tessera Technologies, Inc. (NASDAQ:TSRA) is a $1.86 billion market cap holding company with operating subsidiaries in two segments: Intellectual Property and DigitalOptics. It’s stock is up about 77% year-to-date and, according to Starboard’s latest 13D filing, the fund sold a portion of its stock, mainly to rebalance its equity portfolio (in light of this appreciation). Notwithstanding, Starboard remains a large shareholder of the company (and intends to remain this way). In addition, Mr. Feld continues as an active member of Tessera’s Board.

As it may be induced from the previous statement, this is not to be interpreted as a bearish move. Starboard continues to bet on Tessera Technologies, Inc. (NASDAQ:TSRA), same as Paul Orlin And Alex Porter’s Amici Capital, which held roughly 3.15 million shares of the company as of the end of the third quarter. Another major institutional investor that has been profiting from this company is Steve Cohen’s Point72 Asset Management, which reduced its stake by 44% over the third quarter, but still owns 1.2 million shares.

As an activist fund, Starboard has been pretty active in other companies, too. Most recently, it initiated a stake, with 7.2% of the stock, in Integrated Silicon Solution, Inc. (NASDAQ:ISSI) and formed a stockholder group with several other shareholders, and then sent a letter to the President and CEO, Scott Howarth, outlining the reasons behind the stock’s undervaluation. The fund also reduced its position in DSP Group, Inc. (NASDAQ:DSPG), to 1.04 million shares, down from 1.35 million shares reported in an earlier filing.

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