Starboard Value
| Company type | Private |
|---|---|
| Industry | Hedge fund, Investment management |
| Founded | 2002 |
| Founder | Jeffrey Smith, Mark Mitchell |
Area served | United States |
Key people | Jeffrey Smith (CEO), Mark Mitchell, Peter Feld, John Leonard, Janet Vergis, James Tyree, Steven Shulman |
Starboard Value is a U.S.-based hedge fund established in 2002 by Jeffrey Smith and Mark Mitchell, with Smith serving as the chief executive officer.
History
Starboard originated within Ramius Capital in 2002. In 2005, Peter Feld joined the founding partners Smith and Mitchell. The firm merged with the Cowen Group in 2008, operating as Cowen's hedge fund division until it regained independence in 2011, retaining Smith, Mitchell, and Feld as key leaders.
Structure
As of February 2019, Starboard’s board consists of five members: CEO Jeffrey Smith; John Leonard, CEO of Intellia Therapeutics; Janet Vergis, chair of Amneal Pharmaceuticals; James Tyree, chair of Tyree & D'Angelo Partners; and Steven Shulman, managing partner at Shulman Family Ventures.
Investments and activist campaigns
In 2011, Starboard obtained board representation at both SurModics and Regis Corporation. Later that year in December, it confronted AOL's CEO regarding the Patch network and advocated for distributing $1 billion from patent sales back to shareholders. Though Starboard was unsuccessful in a proxy contest, AOL eventually spun off Patch and returned capital to investors, resulting in a doubling of Starboard’s AOL share value.
After acquiring a 15% ownership in Office Depot, Starboard pushed for the dismissal of CEO Neil Austrian and completion of the merger with Office Max, securing three seats on the board. The firm also supported a proposed merger between Office Depot and Staples, which was ultimately blocked by the FTC due to antitrust concerns.
In November 2017, Starboard took a 10.7% position in Israeli semiconductor company Mellanox Technologies, criticizing its elevated R&D spending and seeking to enhance profit margins. By January 2018, Starboard sought to overhaul Mellanox’s entire board.
In December 2017, Starboard purchased a 9.9% stake in Cars.com, highlighting its undervaluation and potential for sale. By August 2018, it revealed a 5.8% holding in Symantec, nominating five directors to the board; three nominees were appointed by September.
Starboard has also engaged in activist efforts at companies including Smithfield Foods, Calgon Carbon, Tessera Technologies, Yahoo, Brink's Home Security, Macy's, Darden Restaurants, and Papa John's Pizza.
In 2020, Starboard facilitated the replacement of Keith Jackson with Hassane El-Khoury as CEO at ON Semi. In October 2022, it acquired a 7.4% stake in data center provider Vertiv, labeling the company undervalued with opportunities for margin enhancement; Vertiv’s shares surged more than 10% following this disclosure.
In August 2023, Starboard took a 5% ownership position in Tampa-based casual dining operator Bloomin' Brands, which owns restaurant chains such as Outback Steakhouse, Carrabba's Italian Grill, Fleming's Prime Steakhouse & Wine Bar, and Bonefish Grill.
Darden takeover
In October 2014, after executing a highly effective campaign combining public criticism with direct engagement of key shareholders, Smith gained control over Darden Restaurants, a Fortune 500 company operating brands like Olive Garden and Longhorn Steakhouse. One notable critique focused on the insufficient seasoning of Olive Garden’s pasta. A segment on HBO’s Last Week Tonight hosted by John Oliver featured Starboard’s presentation for approximately three minutes, amassing nearly four million views by February 2018. Despite holding under 10% of shares, Smith succeeded in replacing Darden’s entire board and assumed the role of chairman. This marked a significant moment emphasizing shareholder influence over management decisions. Analyst Cohan remarked that such a complete board overhaul at a company of Darden’s scale was unprecedented in recent times. Following Starboard’s intervention, Darden’s stock price increased by close to 60%.
Profitability
Between 2002 and 2014, Starboard generated an average annual return of 15.5%, with 84% of its activist initiatives resulting in positive financial outcomes. Starting in 2004, the firm has facilitated the replacement of more than 80 board members across nearly 30 different boards.