Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Jeffrey Smith Outlines How This Activist Target Can Turn Itself Around

It looks like leaning on Brink’s Company (NYSE:BCO) is Jeffrey Smith‘s latest major move, as the activist investor steps up his interest in the provider of secure logistics and security solutions. According to a recent filing with the Securities and Exchange Commission, Smith’s Starboard Value LP can now be deemed to own 12.4% of the company’s common stock, which includes 4.57 million shares owned directly and 1.45 million shares beneficially owned as part of a cash-settled total return swap agreement with Société Générale. Smith also sent a letter to the company’s Board of Directors, outlining his views on measures to be taken in order to increase shareholder value. Brink’s Company’s popularity among the hedge funds that we track significantly improved during the second quarter, as their combined investments rose to 34% of the company’s common stock.

Jeff Smith

A star in the world of activist investment, Jeffrey Smith now has the power to move the market, as shares of Advance Auto Parts, Inc. (NYSE:AAP) shot up by 11% following reports of Starboard initiating a 3.7% stake in the company. Smith is also famous for managing to replace the entire Board of Directors of Darden Restaurants, Inc. (NYSE:DRI) in 2014 following a contentious proxy battle. According to its latest 13F filing, Starboard Value manages a public equity portfolio valued at more than $4.34 billion and is heavily invested in consumer discretionary and financial stocks. A new addition to Smith’s top ten holdings was Macy’s, Inc. (NYSE:M), with Starboard disclosing ownership of 2.92 million shares, while its holding of MeadWestvaco Corp. (NYSE:MWV), a global packaging company, was reduced by 13% to 8.83 million shares.

Jeffrey Smith
Jeffrey Smith
Starboard Value LP

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 36 months since our small-cap strategy was launched it has returned over 118% and beaten the S&P 500 ETF (SPY) by more than 60 percentage points (read more details).

With competitors having heavily invested to improve their logistical capabilities and having significantly reduced costs, Smith laments Brink’s Company (NYSE:BCO)’s failure to keep up and now urges its management to present a “credible turnaround plan”. According to him, the company should look to reduce overhead costs and design a more incentive-based compensation plan for branch- and field-level employees. Smith also pleads for changes in the technology and route logistics employed by the company, improvements that would drive up margins, while also pushing for it to cut down on operations that do not enhance customer value. Aside from that, he urges the board to explore the possibility of a “strategic combination with another global cash logistics company”, should their turnaround efforts fail again.

Follow Brinks Co (NYSE:BCO)
Trade (NYSE:BCO) Now!

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.