Starboard Value Out Of Darden (DRI), In On Perrigo (PRGO), HP (HPE) in a Big Way

Starboard Value LP was founded by Jeffrey Smith in 2002, and has its offices in New York. The fund invests in U.S. companies based on fundamentals and engages the management teams of companies in which it buys stakes to try and unlock value for shareholders. Starboard Value LP recently filed its Form 13F for the September quarter, in which it reported new positions in eight stocks, while it exited from 7 positions held at the end of June.

In this article we’ll look at a few if biggest changes to Starboard Value’s portfolio in the third quarter, which involved the shares of Perrigo Company (NASDAQ:PRGO), Marvell Technology Group Ltd. (NASDAQ:MRVL), WestRock Co (NYSE:WRK), Hewlett Packard Enterprise Co (NYSE:HPE), and Darden Restaurants, Inc. (NYSE:DRI)

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Jeff Smith

Perrigo Company (NASDAQ:PRGO)

– Shares Owned by Starboard Value LP (as of September 30): 5.89 million

– Value of Starboard Value LP’s holding (as of September 30): $544.29 million

The first stock we’ll look at which Starboard Value acquired during the most recent quarter is Perrigo Company (NASDAQ:PRGO). The fund bought 5.89 million shares during the period, which were worth $544.29 million on September 30. The company recently announced that it is looking for alternatives for its multiple sclerosis drug Tysabri, and has engaged Morgan Stanley to help it explore such alternatives. The company also had an $866 million brand impairment charge related to its acquisition of Omega Pharma NV. Perrigo Company (NASDAQ:PRGO) plans to file an arbitration claim against Waterland, the private equity sellers of Omega Pharma. Shares of Perrigo are down by 36.92% on a year-to-date basis.

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Marvell Technology Group Ltd. (NASDAQ:MRVL)

– Shares Owned by Starboard Value LP (as of September 30): 33.72 million

– Value of Starboard Value LP’s holding (as of September 30): $447.48 million

Marvell Technology Group Ltd. (NASDAQ:MRVL) is another stock in which Starboard Value initiated a stake during Q3, acquiring 33.72 million shares of the company worth $447.48 million. Marvell recently announced a restructuring plan with an intent to focus on research and development (R&D) along with improving its operational efficiency and profitability. Marvell Technology Group Ltd. (NASDAQ:MRVL) expects to reduce its operating expenses by between $820 and $840 million against its current annual expenditure of $1.08 billion. In total, 900 people will lose their jobs as part of the restructuring.

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On the next page, we’ll look at Starboard’s positions (or lack thereof) in WestRock Co (NYSE:WRK), Hewlett Packard Enterprise Co (NYSE:HPE), and Darden Restaurants, Inc. (NYSE:DRI).

WestRock Co (NYSE:WRK)

– Shares Owned by Starboard Value LP (as of September 30): 3 million

– Value of Starboard Value LP’s holding (as of September 30): $145.44 million

In WestRock Co (NYSE:WRK), Starboard Value LP reduced its stake by 41% to 3 million shares worth $145.44 million as of the third quarter’s close. The company reported revenue of $3.61 billion for the fourth quarter of its fiscal year 2016, topping estimates by $10 million, while EPS of $0.71 was higher than expectations by $0.08. Shares of WestRock Co (NYSE:WRK) are up by 7.19% since the beginning of the year.

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Hewlett Packard Enterprise Co (NYSE:HPE)

– Shares Owned by Starboard Value LP (as of September 30): 5.48 million

– Value of Starboard Value LP’s holding (as of September 30): $124.77 million

Starboard Value LP added a new position in Hewlett Packard Enterprise Co (NYSE:HPE) to its portfolio during the third quarter. The fund bought 5.48 million HPE shares, worth $124.77 million at the end of September. Hewlett Packard Enterprise Co (NYSE:HPE) recently entered into a $600 million agreement with Sykehuspartner which will see it work closely with the ICT provider, offering infrastructure and project services to it. Ken Griffin’s Citadel Advisors added 7.57 million HPE shares to its own portfolio in Q3, lifting its position to 11.56 million shares.

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Darden Restaurants, Inc. (NYSE:DRI)

Lastly, Starboard Value LP dumped its stake in Darden Restaurants, Inc. (NYSE:DRI) during the third quarter. Restaurant companies continue to struggle with rising labor costs and falling same-store sales. Last week voters in Arizona, Colorado and Maine voted in favor of raising minimum wage to $12 in a phased manner, while Washington has agreed to increase minimum wage to $13.50 by 2020. Mr. Smith resigned from Darden’s board earlier this year, a board he completed overhauled after winning an epic proxy context against its former management team in 2014. Darden shares have gained about 50% since the middle of 2014.

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Disclosure: None