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Jeffrey Smith Opens New Activist Position in Brink’s Company (BCO), Resigns from Quantum Corp (QTM) Board

Jeffrey Smith’s Starboard Value has disclosed a number of recent moves through filings with the SEC and we have all the latest details. Included is a new activist position in Brink’s Company (NYSE:BCO), an increased position in the fund’s Silicon Solution, Inc. (NASDAQ:ISSI) holding, and finally the resignation of Smith from the board of Quantum Corp (NYSE:QTM).

Jeff Smith

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, as Starboard has very successfully done on numerous occasions in the past. In recent years, the average returns of activists’ hedge funds has been much higher than the returns of an average hedge fund for this very reason. However, that doesn’t mean we advocate investing all your money with an activist fund manager. We have found an even better way to profit from the holdings of fund managers, and that is to invest solely in their best small-cap picks. This strategy has returned over 135% since it was launched at the end of August, 2012 (see the details), beating the market by about 80 percentage points.

Let’s start with Smith’s new position in Brink’s Company (NYSE:BCO), which his fund began amassing on March 10. By May 1 it had gathered 3.97 million shares, giving it an 8.2% stake in the security services company. While the position is activist, Starboard did not express any intention to engage with the company’s management or board of directors concerning its operations at this time. Instead it cited the company as being an attractive investment opportunity with shares that were undervalued.

It hasn’t taken long for the investment to pay immediate dividends, as Brink’s Company (NYSE:BCO)’s shares are up by 23% since March 10. The company’s latest earnings report on May 1 contributed to a good chunk of those gains, with Brink’s smashing analysts’ earnings estimates by more than 50%, posting earnings of $0.41 per share, despite revenue actually coming in below estimates. Well-known for its iconic armored trucks which are used to transport cash and valuables, Brink’s Company (NYSE:BCO) is up over 50% over the past six months. Scopia Capital was another fund who opened a big position at the right time, getting on board the stock during the fourth quarter with a position of 2.88 million shares.

Let’s move on to Quantum Corp (NYSE:QTM), where Smith has resigned from the board of directors after serving on it since 2013. As per a replacement rights agreement with Quantum, Smith was able to recommend Robert J. Anderson, the Chief Financial Officer of  Tessera Technologies, Inc. (NASDAQ:TSRA), a company in which Smith also owns a large position, as his replacement on the board.

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