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Why You Should Pay Attention to Activist Jeff Smith’s Latest Moves

Ira Sohn Investment Conference is one of the most awaited events that aside from supporting an important cause, ending childhood cancer, also has the ability to move the markets since it features some of the well-known investors, who present their long and short ideas. This year, the conference will take place on May 4 and will feature several very important names (you can see the full list here). We have decided to take a look at the speakers at the conference and some of their stock picks to give readers a better idea of what to expect at the event. In a previous article, we have looked at billionaire David Einhorn’s long and short bets (read here) that he might be discussing during his presentation. In this article, let’s take a look at another activist investor, Jeff Smith of Starboard Value.

Over the years, Mr. Smith successfully conducted several important campaigns and managed to improve the shareholder value at several companies, such as Darden Restaurants, Inc. (NYSE:DRI), where he managed to replace the entire board of directors and to conduct a monetization of the company’s real estate assets through their spin-off into Four Corners Property Trust Inc (NYSE:FCPT) REIT. Overall, more than 80% of Smith’s campaigns ended successfully and Starboard posted an annualized return of 16% since 2002.

In the last couple of months, Starboard made headlines in relation to two of Smith’s recent targets, which he might be discussing at the Ira Sohn conference: Depomed Inc (NASDAQ:DEPO) and Yahoo! Inc. (NASDAQ:YHOO). Yahoo has been under attack from Mr. Smith since Alibaba’s IPO in 2014. In September, Starboard sent a letter to Yahoo!’s CEO Marissa Mayer and urged her to find a tax-efficient way to unlock the value from the company’s stakes in Alibaba and Yahoo Japan, to reduce the acquisitions and even to merge with AOL (read article). As the company was trying to improve its situation, particularly in its struggling core business, Starboard did not make any public statements. However, since Yahoo! Inc. (NASDAQ:YHOO) failed to spin-off its investments in Alibaba and Yahoo Japan due to high tax liabilities, and its core business continued to disappoint, Starboard stepped up its involvement and in January delivered another letter, in which it expressed its disappointment with the Board and the current management. At the end of March, Starboard launched a proxy fight to remove the entire board, including CEO Marissa Mayer and said it would nominate nine new candidates. Starboard owns around 1.7% of Yahoo! Inc. (NASDAQ:YHOO) and it was the fund’s third-largest 13F holding. Both parties can still come to an agreement before the stockholder meeting in June, although it is unlikely, because their talks in March failed and led to the proxy fight. There is a high chance that Starboard will be supported by many shareholders, since the activist fund is pushing for a sale of the core business and will be interested to maximize the shareholder value of the transaction.