In a recently-amended 13D filing with the Securities and Exchange Commission, Jeffrey Smith’s Starboard Value disclosed a 9.0% ownership stake in The Brink’s Company (NYSE:BCO), which amounts to 4.37 million shares. Starboard Value increased its stake in the global security service provider by 401,760 shares since the fund’s most recent 13D filing on Brink’s (read more details).
Starboard Value is a New York-based activist hedge fund co-founded by Jeffrey Smith in 2002. The investment firm invests in deeply undervalued companies and attempts to make changes at these companies by actively engaging with their management teams and board of directors. Starboard Value mainly focuses its strategy on small-to-mid-cap stocks, which has proven to very successful during the course of the fund’s existence. Reportedly, Starboard has earned money on 88% of its activist investments, delivering an annualized return of 22% since its inception in 2002. As a result, Jeff Smith’s investment firm has outperformed the S&P 500 by three times over the past 13 years, with less risk and volatility. Jeff Smith, the current Chief Executive Officer and managing member of Starboard Value, was named as the “the most feared man in corporate America” in December, according to Fortune magazine. The fund’s most recent 13F filing with the SEC reveals that the market value of its public equity portfolio stands at $4.81 billion as of March 31.
Following activist funds like Starboard is important because it is a very specific and focused strategy in which the investor doesn’t have to wait for catalysts to realize gains in the holding. A fund like Starboard can simply create its own catalysts by pushing for them through negotiations with the company’s management and directors. In recent years, the average returns of activists’ hedge funds has been much higher than the returns of an average hedge fund. Furthermore, we believe do-it-yourself investors have an advantage over activist hedge fund investors because they don’t have to pay 2% of their assets and 20% of their gains every year to compensate hedge fund managers. We have found through extensive research that the top small-cap picks of hedge funds are also capable of generating high returns and built a system around this premise. In the 32 months since our small-cap strategy was launched it has returned over 123% and beaten the S&P 500 ETF (SPY) by more than 66 percentage points (read more details).
The Brink’s Company (NYSE:BCO) is an American security and protection company that is widely-known for its bullet-resistant armored trucks used to carry money and other valuable goods. Put it differently, Brink’s is a provider of security services to banks, retailers, governments, mints and jewelers, among others. The company has evolved from an armored transportation service company to one of the main providers of logistics solutions and secure transportation in the world. The shares of Brink’s have grown by over 21% since the beginning of the current year, but the 9.0% ownership stake of activist hedge fund Starboard Value suggests that there is more upside potential for the stock.