Jeff Smith is a Managing Member and the Chief Executive Officer and Chief Investment Officer of Starboard Value L.P. (‘Starboard’). Prior to founding Starboard, Mr. Smith was a Partner and Managing Director at Ramius LLC and the co-founder and Chief Investment Officer of the funds that comprised the small cap value and opportunity investment platform. Prior to joining Ramius in January 1998, Mr. Smith served as Vice President of Strategic Development for The Fresh Juice Company, Inc. Mr. Smith began his career in the Mergers and Acquisitions department at Société Générale. Jeff Smith spoke today at the Capitalize For Kids Conference in Toronto and presented his favorite idea. Below are some (very) informal notes from Smith who explained Starboard Value’s plan for Darden Restaurants, Inc. (NYSE:DRI).
ValueWalk will be covering the conference today and tomorrow. Sign up for our free newsletter to ensure you do not miss any coverage.
Also see: Guy Gottfried Pitches Long Tree Island Steel At Capitalize For Kids and Lee Ainslie Pitches Long Qihoo 360 At Capitalize For Kids
Jeff Smith of Starboard Value doing his typical pitch for Starboard (see every conference he has spoken at for background, haha)
Jeff Smith on Darden Restaurants, Inc. (NYSE:DRI)
Proposed plan
1 operational improvement
2 evaluation of all options for the company’s real estate holdings
3 evaluate the most logical and efficient combination of restaurant concepts
4 evaluate initiatives to franchise certain concepts and take advantage intl growth prospects
Got all 12 seats on the board
Massive change in the atmosphere now at DRI
This was a landmark event and should be a warning to all companies — they need to at least listen
Jeff Smith on Yahoo! Inc. (NASDAQ:YHOO)
Shareholders called Starboard, they are frustrated
41b market cap
Alibaba Group Holding Ltd (NYSE:BABA) — 15% stake remains value: $35B pre tax
Yahoo japan 35.5% stake value 7.5b
Cash 7.4b
Core operating business has value (5.5 ebitda x 1b in ebitda)
Full value 62b
Why does the discrepancy exist?
they are selling BABA stake and paying full taxes
if they pay full taxes 80% of the discrepancy goes away
Solution:
Find a tax structure that is efficient
Price target $63 (50% upside)
Yahoo has an annual elected board, and a meeting coming up march 2015
due to their lock up period for 60 days post BABA spin, they are NOT allowed to talk about how they are going to monetize their remaining stake
Jeff Smith on MeadWestvaco Corp. (NYSE:MWV)
Consolidated packaging company
They WILL spin the non-core Specialty Chemical business and the Real estate piece
Corporate overhead is crazy high, 3x higher than comps
Capex has been going up every year
NEED to improve operating margins
Reduce corp overhead
Improve capital allocation
Explore alternatives to unlock value of pension assets
