Jeffrey Smith‘s Starboard Value is one of the funds that has appeared many times on our radars in the last couple of months. Mr. Smith has made a couple of bold moves, such as pushing Yahoo! Inc. (NASDAQ:YHOO)‘s CEO Marissa Mayer to spin off the company’s equity investments in Yahoo! Japan and Alibaba Group Holding Ltd (NYSE:BABA), and pushing for a merger between Office Depot Inc (NASDAQ:ODP) and Staples, Inc. (NASDAQ:SPLS). In a recent move, Starboard reported reducing its activist position in Tessera Technologies, Inc. (NASDAQ:TSRA), a $2.0 billion intellectual property and DigitalOptics company, where Starboard has a representative on the board. In two Form 4 filings, it was disclosed that Sraboard had sold 250,000 shares and 325,000 shares respectively, in several transactions at average prices of $39.77 and $39.41 per unit. Following the disposal, Starboard’s stake comprises 6% of Tessera Technologies, Inc. (NASDAQ:TSRA)’s stock.
In its latest 13F filing, Starboard reported an equity portfolio valued at $4.41 billion. The largest equity position at the end of December was represented by Darden Restaurants, Inc. (NYSE:DRI), another of Starboard’s activist play. The fund disclosed ownership of 11.64 million shares, valued at $682.16 million. Earlier last year, Starboard went activist on the company and after several months managed to oust the entire board of directors of the company and replace it with its own nominees. The stock started to grow soon after, and is currently up by 30% over the last six months. Aside from Starboard, 21 other funds among those that we track disclosed holding shares of Darden Restaurants, Inc. (NYSE:DRI) in the latest round of 13F filings, including Israel Englander’s Millennium Management with 815,700 shares and Kenneth Squire’s 13D Management, which invests in activist situations and held 216,300 shares of Darden Restaurants, Inc. (NYSE:DRI) at the end of 2014.
Starboard also held around 10.09 million shares of MeadWestvaco Corp. (NYSE:MWV), up by 8% over the quarter. Starboard had been urging the company to spin-off its specialty chemical business, which the company announced would happen at the beginning of the year. Moreover, MeadWestvaco Corp. (NYSE:MWV) recently entered into a combination agreement with Rock-Tenn Company (NYSE:RKT), the value of the transaction amounting to $16 billion. Investors have probably been anticipating such developments, since the number of funds holding the stock went up to 30 during the fourth quarter. Clint Carlson’s Carlson Capital reported ownership of 1.81 million shares in its latest 13F filing, down by 19% over the quarter.
Another company that made the top of Starboard’s equity portfolio was Yahoo! Inc. (NASDAQ:YHOO). Starboard initiated a stake at the end of September last year and left it unchanged at 7.72 million shares during the fourth quarter. In addition to that, Mr. Smith sent a letter to the company’s CEO, Mayer, after initiating a stake and suggested that, in order to unlock shareholder value, the company should spin-off its $32 billion stake in Alibaba, a move which the company also announced earlier this year. Moreover, the investor suggested that Yahoo! Inc. (NASDAQ:YHOO) should consider a merger with AOL, Inc. (NYSE:AOL), in order to improve its competitive positions and that it should cease its aggressive acquisition strategy.
Since the IPO of Alibaba Group Holding Ltd (NYSE:BABA), Yahoo was able to gain more and more attention from investors due to the significant hidden value from its equity stake in the Chinese e-commerce giant. At the end of 2014, 99 funds from our database held shares of Yahoo, up from 94 in the previous quarter. Yahoo! Inc. (NASDAQ:YHOO) was also one of the favorite stocks among billionaires, with 12 funds disclosing long positions. Christian Leone’s Luxor Capital Group was one of the funds that initiated a stake in Yahoo during the October-December period, disclosing 9.22 million shares in its latest 13F. In addition, billionaires Ken Griffin, George Soros, and David Shaw are also among the shareholders of Yahoo.
The next two companies should be discussed together as they are Office Depot Inc (NASDAQ:ODP) and Staples, Inc. (NASDAQ:SPLS), which have recently announced their intention to combine into one big specialty retailer. Starboard initiated a stake in Staples and disclosed 15.84 million shares in its latest 13F and it trimmed its stake in Office Depot Inc (NASDAQ:ODP) by 5% to 44.21 million shares. The fund’s activist stakes in Office Depot Inc (NASDAQ:ODP) and Staples, Inc. (NASDAQ:SPLS) are valued at $379.12 million and $286.96 million respectively. The rumors about Mr. Smith pushing for a merger between the two office supplies retailers started to appear after the investor reported two bullish moves in both companies last year. A merger is seen by many as a positive development, as specialty retailers need to compete with large commerce giants like Wal-Mart and Amazon that capture more clients by offering a larger range of products.
Tessera Technologies, the company in which Starboard has recently reported reducing its position, was the sixth-largest holding in the fund’s 13F portfolio at the end of December. Previous to its latest transactions, Starboard has also unloaded 1.0 million shares during the last quarter of 2014. Even though Starboard has been unloading shares, its representative Peter A. Feld continues to serve as a director on Tessera Technologies, Inc. (NASDAQ:TSRA)’s board.
Disclosure: None
