Alena Butor

This article is part of a series that provides an ongoing analysis of the changes made to Starboard Value's 13F stock portfolio on a quarterly basis. It is based on Jeff Smith's regulatory 13F Form filed on 2/14/2023. The 13F portfolio value increased ~15% from $4.55B to $5.22B. The holdings are concentrated with recent 13F reports showing around 40 positions, many of which are very small. The largest five stakes are GoDaddy, Aecom, Willis Towers Watson, Gen Digital, and Salesforce.com. They add up to ~51% of the portfolio. Please visit our Tracking Jeff Smith's Starboard Value Portfolio series to get an idea of their investment philosophy and our last update for the fund's moves during Q3 2022.

Jeff Smith founded Starboard Value in March 2011 after being with Ramius LLC, a subsidiary of the Cowen Group since 1998. His game plan is investing in undervalued companies and then engaging in activism to unlock value.

Note: Regulatory filings show them owning about one-third of Acacia Research (ACTG).

Salesforce (CRM), Vertiv Holdings (VRT), and Splunk Inc. (SPLK): CRM is a large (top five) 7.69% of the portfolio position established this quarter at prices between ~$128 and ~$165 and the stock currently trades at ~$197. The 4.42% VRT stake was purchased at prices between ~$10.20 and ~$15.40 and it is now at ~$14. SPLK is a ~3% of the portfolio position established at prices between ~$68 and ~$92 and it now goes for ~$95.

ACI Worldwide (ACIW): ACIW stake was established in Q1 2020 at prices between ~$22 and ~$38.50. The stake was increased over the next three quarters at around the same price range. There was a ~85% reduction over the last three quarters at prices between ~$20.50 and ~$31.50. The remainder stake was disposed this quarter. The stock currently trades at $26.53.

Huntsman Corp. (HUN): The 2.77% HUN stake was established in Q3 2021 at prices between ~$24 and ~$30. There was a ~55% stake increase next quarter at prices between ~$30 and ~$35. The last two quarters saw a ~70% reduction at prices between ~$24 and ~$38. The disposal this quarter was at prices between ~$25 and ~$29. The stock currently trades at $27.27.

GoDaddy (GDDY): The ~15% of the portfolio stake in GDDY is currently the largest position in the portfolio. It was established over the two quarters through Q1 2022 at prices between ~$67 and ~$86 and the stock currently trade at ~$77. There was a ~25% stake increase this quarter at prices between ~$67.50 and ~$81.

Note: They have a ~6% ownership stake in the business.

iShares Russell 2K Value ETF (IWN): The 2.39% IWN stake was purchased last quarter at prices between ~$129 and ~$159 and it is now at ~$137. There was a ~50% stake increase this quarter at prices between ~$131 and ~$150.

iShares Russell 2K (IWM) ETF: The 1.74% IWM stake was established in Q2 2020 at prices between ~$105 and ~$150. Q3 2021 saw a ~170% stake increase at prices between ~$212 and ~$231. Q2 2022 saw the position sold down by ~80% at prices between ~$164 and ~$208. IWM currently trades at ~$179. There was a two-thirds stake increase this quarter at prices between ~$167 and ~$188.

Note: Certain index ETFs along with options on them are frequently traded presumably to hedge other parts of the portfolio.

Willis Towers Watson (WTW): The large (top three) ~9% WTW position was purchased in Q4 2021 at prices between ~$226 and ~$249 and it is now at ~$233. There was a ~14% trimming this quarter.

Gen Digital (GEN), previously NortonLifeLock: GEN is a large 7.77% of the portfolio position first purchased in Q3 2018 at prices between ~$19 and ~$22. Q1 2019 saw a ~50% stake increase at around the same price range. That was followed with a ~20% stake increase in Q3 2019 at prices between ~$21 and ~$26. Next quarter saw a ~40% selling at prices between ~$22.70 and ~$26. There was another ~20% selling in Q2 2021 while this quarter saw a ~15% stake increase. The stock is now at $17.16. There was marginal trimming this quarter.

Note: Their overall cost-basis is much lower than what is implied by the quoted prices above as it does not account for the $12 special dividend paid out in Q1 2020.

Humana Inc. (HUM): The large 7.61% of the portfolio stake in HUM was established in Q1 2022 at prices between ~$363 and ~$465 and the stock currently trades at ~$510. This quarter saw a ~20% selling this quarter at prices between ~$494 and ~$563.

Wix.com (WIX): WIX is a 3.42% of the portfolio position purchased this quarter at a cost basis of ~$68 per share. The stock currently trades at ~$98. There was a ~10% trimming this quarter.

Commvault Systems (CVLT): CVLT is a 1.86% of the portfolio position established in Q1 2020 at prices between ~$30.70 and ~$51.50. The stock currently trades at ~$57. There was a ~60% reduction this quarter at prices between ~$58 and ~$68.

Pediatrix Medical Group (MD), previously MEDNAX: MD is a 1.56% of the portfolio stake built in Q4 2019 & Q1 2020 at prices between ~$9.40 and ~$27.70. Next quarter also saw a minor increase. Since then, the stake had remained steady. Q3 2021 saw a ~30% selling at ~$32 per share. The stock currently trades at $14.91. There was a ~8% trimming this quarter.

Note: Starboard controls ~6.3% of the business. Their overall cost-basis is ~$22.60. In December 2019, Starboard nominated a majority slate of directors. In July 2020, the CEO and five directors were replaced in an agreement with the company. The agreement also called for the sale of the radiology solutions business. That business was sold for ~$885M in December 2020.

ON Semiconductor (ON): The 1.14% ON stake was established in Q4 2020 at prices between ~$21.50 and ~$32.50 and the stock currently trades at $81.14. There was a ~87% reduction over the last four quarters at prices between ~$47 and ~$77.

Enovis Corporation (ENOV), previously Colfax: The ENOV stake was reduced by ~78% to a small stake during Q2 2022 at prices between ~$55 and ~$71. The stock is now at $53.47. The last two quarters saw further selling and the stake is now very small at 0.36% of the portfolio.

Note: Colfax spun off ESAB Corporation (ESAB) and renamed itself Enovis in a transaction that closed in April. Colfax shareholders received one share of Enovis and one share of ESAB for every three shares of Colfax held.

Aecom (ACM): ACM is currently the second-largest stake in the portfolio at ~11%. It was established during the first three quarters of 2019 at prices between ~$27.50 and ~$38. Q3 2020 saw a ~30% stake increase at prices between ~$35 and ~$42. The stock currently trades at ~$84.50.

Note: Starboard controls ~5% of the business. They have nominated two independent directors to the board in a mutual agreement with the company.

Papa John's International (PZZA): Starboard's investment in PZZA goes back to a ~$250M cash infusion through convertible preferred stock made in February 2019. In May 2021, ~30% of the preferred stock was bought back by the company at ~$190M while the rest were converted to 3.46M shares of common stock. The stock currently trades at $75.22 compared to the conversion price of $50.06. There was a ~20% reduction in Q3 2021 at prices between ~$114 and ~$122. They still control ~7.6% of the business.

Mercury Systems (MRCY): The 3.23% MRCY position was purchased in Q1 2022 at prices between ~$51 and ~$70 and it is now at $50.79. Q2 2022 saw a ~10% stake increase while last quarter there was a ~4% trimming.

Green Dot Corp. (GDOT): GDOT is a 1.60% of the portfolio position established in Q1 2020 at prices between ~$18.50 and ~$36.20. Next quarter saw a ~11% trimming while in Q1 2021 there was a ~20% stake increase at prices between ~$46 and ~$60. The stock currently trades at $16.80. Their overall cost-basis is ~$32 per share.

Note: they have a ~13% economic stake in the business (includes cash-settled total return swaps).

LivePerson (LPSN): The 1.36% LPSN position was purchased in Q1 2022 at prices between ~$18 and ~$36 and the stock currently trades at $4.41. The next quarter saw a ~9% stake increase.

Note: They have a ~9.4% ownership stake in LivePerson.

Cyxtera Technologies (CYXT): Starboard Value was the sponsor of the SPAC Starboard Value Acquisition that had a $360M IPO in September 2020. In February 2021, they announced a $3.4B EV deal to merge with Cyxtera, a data-center business spun-out from Lumen Technologies (CenturyLink at the time). The deal closed last July. Starboard's overall cost-basis is ~$7.25 per share. CYXT currently trades at $0.32. There was a ~25% stake increase in Q1 2022 at prices between ~$10.60 and ~$13.30. They control ~15% of the business.

Below is a spreadsheet that shows the changes to Jeff Smith's Starboard Value 13F portfolio holdings as of Q4 2022:

Jeff Smith - Starboard Value's Q4 2022 13F Report Q/Q Comparison (John Vincent (author))

Editor's Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.