Depomed Inc (NASDAQ:DEPO) is one of Starboard’s new positions and the fund has quickly amassed a 9.8% stake. Since Depomed is incorporated in California, the laws allow a shareholder with a 10% stake to call a special meeting to replace directors. Depomed had said earlier that it would propose to move its incorporation to Delaware, where the threshold stands at 25%. In a recent letter sent to Depomed’s CEO and board of directors, Starboard accused the board of trying to “entrench themselves” and of refusing to negotiate with Horizon Pharma a potential acquisition of Depomed. As Starboard has taken these governance issues public, it is likely that it will also be supported by most shareholders. Aside from Starboard, other shareholders of Depomed Inc (NASDAQ:DEPO) include Richard Mashaal’s Rima Senvest Management and Kevin Kotler’s Broadfin Capital.
Mr. Smith might also talk about the monetization of real estate assets, giving as an example Macy’s, Inc. (NYSE:M), in which Starboard owns a $116 million position. Starboard said in a January presentation that Macy’s could increase its shareholder value by taking advantage of its real estate, which is worth around $21 billion and is not fully appreciated by the market. Starboard suggested that Macy’s, Inc. (NYSE:M) could create several separate Joint Ventures to “attract the appropriate partners who will pay the most for different types of assets”. This would allow Macy’s stock to grow to $70 per share. As stated earlier, Darden Restaurants, Inc. (NYSE:DRI), where Starboard managed to replace the entire board, conducted a spin-off of its real estate assets into a REIT last year. Billionaire David Einhorn’s Greenlight Capital agrees with this position, as it stated in an investor letter and said that there is a possibility that Macy’s, Inc. (NYSE:M) would be acquired and taken private to unlock the value hidden in its real estate assets.
At the beginning of 2016, Starboard’s largest position was represented by Darden Restaurants, Inc. (NYSE:DRI), which amassed over 19% of its equity portfolio, followed by Advance Auto Parts, Inc. (NYSE:AAP) and Yahoo! Inc. (NASDAQ:YHOO). Last year, Starboard went activist on Advanced Auto Parts, and put pressure on the company to improve its profits. The investor reached an agreement with the company, following which Advance Auto Parts, Inc. (NYSE:AAP) appointed Mr. Smith to its board and offered Starboard the possibility to nominate two independent directors. Following the agreement, the seller of auto parts had announced the retirement of its CEO and earlier this month it said that former PepsiCo, Inc. (NYSE:PEP)’s head of Frito-Lay North America Tom Greco would become the new CEO. Starboard held 1.71 million shares of Advance Auto Parts, Inc. (NYSE:AAP) at the end of 2015.
Disclosure: none
