Starboard Value Solidifies Position in Emulex Corporation (ELX), Seeks For Changes

In a recent 13D filing with the Securities and Exchange Commission, Jeffrey Smith‘s hedge fund Starboard Value, disclosed it is increasing its stake in data center storage company Emulex Corporation (NYSE:ELX), which now amounts to 7.25 million shares. The value of the stake is worth $57.1 million. With the boost, the hedge fund added over 2 million shares to its position in comparison to the last quarter.

Jeff Smith

The acquisition of the additional shares solidifies Smith’s position in Emulex Corporation (NYSE:ELX), with Starboard Value now owning 7.9% of the company. The move should be watched closely, especially if we also take into account the letter sent by Starboard Value to Emulex’s President and CEO, Jeffrey W. Benck, and the Board of Directors, in which the hedge fund expresses its concern that the company is very undervalued. “We believe Emulex is extremely undervalued and that clear opportunities exist within the control of management and the Board of Directors of the Company (the “Board”) to unlock significant shareholder value,” the letter said.

“It is time for a significant change at Emulex. Specific changes must be made to address years of dismal operating and share price performance as well as sub-optimal corporate governance. We believe a newly reconstituted Board comprised of independent directors and shareholder advocates should be able to evaluate each of Emulex’s businesses with a fresh perspective and determine the right strategy to enhance shareholder value,” Starboard added.

In addition to Starboard Value, Elliott Management, managed by Paul Singer, Youlia Miteva’s Proxima Capital Management and Royce & Associates are holding stakes in Emulex.

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Disclosure: none