Office Depot Inc (ODP), Compuware Corporation (CPWR) & More: Activist Hedge Fund Bullish On These Stocks..Should You Buy?

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Related tickers: Office Depot Inc (NYSE:ODP), Compuware Corporation (NASDAQ:CPWR)

If you belong to the school of thought that believes analyzing the fundamentals of a company is the best way to decide if it’s a worthy investment, you may want to take a look at Starboard Value’s top five picks. Founded by Jeffrey Smith in 2002, Starboard Value is a fundamental-oriented activist hedge fund that focuses on small cap stocks. It has grown the amount of assets it has under management to more than $1 billion. Most of these assets are from the technology and services sector, and it’s always important to track hedge fund sentiment for its market-beating potential.

Office Depot Inc (NYSE:ODP)

The largest holding is Office Depot Inc (NYSE:ODP). Its 52-week trading range is between $1.61 and $6.10. It has been in meaningful talks with OfficeMax Inc (NYSE:OMX) to merge. The merger makes sense if the two have any chance of formidably competing with rival Staples, Inc. (NYSE:SPLS). The market caps of OfficeMax Inc (NYSE:OMX) and Office Depot Inc (NYSE:ODP) are each about $1 billion. That compares to Staples, Inc. (NYSE:SPLS)’ market cap of roughly $9 billion. The deal is pending the results of an investigation into the merger by the Federal Trade Commission. If the deal is eventually approved, it may have an estimated $1.2 billion.

Integrated Device Technology Inc (NYSE:IDTI) is the second largest stock in Smith’s hedge fund. The company designs, develops, manufactures, and markets a range of integrated circuits for communications, computing, and consumer industries worldwide. In March, it shed its smart metering IC product lines by selling them to Atmel in an all-cash transaction. The move is important because it allows the company to sharpen its strategic focus while reducing operating expenses and improving profitability, noted the president and CEO of the company, Ted Tewksbury.

Third on Starboard Value’s list is Progress Software Corporation (NASDAQ:PRGS). The company recently reported earnings for the first quarter. Although it beat Wall Street estimates, it missed on profit-per-share. Specifically, its revenues year over year were up 2%. They totaled about $89 million. Its earnings per share for the quarter were $.23. Analysts expected revenues of $86.3 million, and an EPS of $.24. The guidance it released was not very cheery either; it is $82.1 million.

Progress Software Corporation (NASDAQ:PRGS)’s CEO Phil Pead said during the earnings conference call that the company is in the midst of executing its strategic plan. A goal is to improve the company’s operating margin, and Pead said that progress is being made. To improve the rate of its revenue growth, the company is “releasing new and innovative functionality across our solution suites and significantly increasing our customer engagement,” Pead said. The company’s plan is crucial to it being able to compete in this space. One of its immediate peers is Tibco Software Inc. (NASDAQ:TIBX).

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