We recently published a list of Jeff Smith’s Top 10 Activist Targets and Their Returns Compared to the S&P 500. In this article, we are going to take a look at where Healthcare Realty Trust Incorporated (NYSE:HR) stands against other Jeff Smith’s top activist targets.
Jeff Smith is arguably the “most feared man” in corporate America, having waged some of Wall Street’s most aggressive and successful activist campaigns. Having served on more than 17 companies’ boards and chairing four underscores his reputation as one of the most successful activist investors in unlocking shareholder value. Smith has become one of the most feared activist investors at the back of Starboard Value LP, a hedge fund he founded alongside two partners in 2011. Given that the hedge fund has targeted hundreds of companies, it underscores its strategy of conducting in-depth analysis to discover stocks trading below their fair value.
In return, Starboard Value LP has always waged activist campaigns and pushed for strategic changes that could bolster the company’s value. Part of the strategy entails pushing for board seats or management changes. The hedge fund is known to agitate for the potential sale of units or the entire business in the race for shareholder value. By targeting IT giants and consumer cyclical stocks over the past ten years, Smith has more than doubled the hedge fund’s assets under management to over $5.5 billion. In addition, the average market valuation of the companies that Starboard Value LP invested in was over $45 billion, up from about $7 billion in 2020.
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Over that period, Starboard Value LP established a reputation for making things difficult for executives and directors who disagreed with its change requests and occasionally fired them. Nevertheless, Jeff Smith’s strategy differs greatly from the more confrontational and widely publicized campaigns of fellow activist investors Carl Icahn and Bill Ackman. Following his appointment as Darden’s chair, he and other board members worked shifts to gain a close-up look at the company. Smith learned how to make pizza at Papa John’s restaurants, which he chaired before waging an activist campaign to unlock value.
Starboard Value LP returned less than 5% for investors in 2024, underperforming its peers. The poor performance occurred during a year when corporate America saw a massive upheaval in boardrooms as activist investors fought for change and showed off their muscles like never before. In 2024, activist funds produced an average return of 11.5%. ValueAct Capital Management, a competitor of Starboard Value LP, reported a 21% increase over that time as Sachem Head Capital Management delivered roughly 22% on capitalizing on the artificial intelligence-driven run in the markets.
Amid the underperformance in 2024, Jeff Smith’s hedge fund still stands out as one of the most successful activist hedge funds. Since its inception, the hedge fund has enjoyed an average return of 25.02% on its 152 activist campaigns, outperforming the Russell 200, which averaged 13.65% over the same period.
Our Methodology
We sifted through financial media reports and settled on the activist investor’s biggest campaigns. We also computed their long-term returns compared to the S&P 500 since Starboard Value LP lodged its campaigns. The campaigns are ranked in chronological order.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
An aerial view of a luxurious upper-upscale hotel in a US location, showing the scale of the business the company operates in.
Healthcare Realty Trust Incorporated (NYSE:HR)
Position Initiated: November 2024
Value of the Stake: N/A
Stock Return Since November 2024 to April 2025: -11.14%
S&P 500 Return Since November 2024 to April 2025: -10.35%
Number of hedge funds holding stakes: 29
Healthcare Realty Trust Incorporated (NYSE:HR) is a real estate investment trust (REIT) that owns and operates medical outpatient buildings in market-leading hospital campuses. Its portfolio includes over 650 properties. Starboard Value LP confirmed a 5.9% stake in the company on November 26 2024, and started pushing for board seats in a bid to influence decision-making.
The activist investor struck an agreement with the healthcare-focused REIT and secured four seats on the board, including an independent chair of the board. The push for board seats came on Starboard Value LP remaining concerned with the impact of the $18 billion acquisition of Healthcare Trust of America in 2022.
Following the integration of the acquisition, property operating expenses skyrocketed to 37% from 31%, with the stock going down by about 15%. With a voice on the board, Starboard Value LP remains well-positioned to push for initiatives that unlock value from the acquisition and bolster operating margins.
Overall, HR ranks 2nd on our list of Jeff Smith’s top activist targets. While we acknowledge the potential of HR, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than HR but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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