There was Yahoo. There was Depomed. There was Marvell Technology. And now, with a new investment in Hewlett Packard Enterprise (HPE), activist investor Starboard Value Fund appears to be going for a grand slam of cage-rattling among Bay Area businesses this year.
According to a regulatory filing on Monday, New York-based Starboard has acquired a $124.7 million stake in HPE. It remains to be seen if Starboard, a hedge fund headed up by investor Jeffrey Smith, will reach out to HPE Chief Executive Meg Whitman in an effort to increase its influence at the enterprise -technology company that was created when Hewlett-Packard split in two in 2015.
Neither Starboard nor HPE returned requests for comment on the investment.
It's not uncommon for institutional investors and fund managers to buy large amounts of stock in publicly traded companies, but Starboard is another animal. Starboard is known for buying up stakes in companies that it views as being improperly managed or undervalued. It then launches efforts to shake up those organizations, often by seeking to add several of its own nominees to those companies' boards of directors.
Starboard is no stranger to the CEOs around the Bay Area. Already this year, Starboard has used its stock ownership and activist philosophy to grab seats on the boards of chipmaker Marvell Technology, which has its U.S. headquarters in Santa Clara, and pharmaceutical company Depomed, of Newark.
Its most high-profile attack came against Yahoo when, earlier this year, Starboard said it would submit a slate of directors to replace Yahoo's entire board, including CEO Marissa Mayer. Starboard and Yahoo reached a sort of a truce in April, when Yahoo added four of Starboard's nominees to its board of directors. Yahoo is now in the process of being sold to Verizon Communications.
Rob Enderle, director of technology research firm the Enderle Group, said that it's possible Starboard may see an opportunity to gain influence within HPE, which is becoming less and less of the old Hewlett-Packard that was once the standard-bearer for the Bay Area's tech industry.
When HP split, HPE took over responsibility for the old company's high-end businesses such as computer servers, storage, networking and software. HP Inc., the other company resulting from the split, handles personal computers and printing services and technologies. Over the last year, HPE has laid off thousands of employees, announced an $8.8 billion merger of most of its software business with Micro Focus, and spun off and merged its services business with Computer Sciences in a deal valued at $8.5 billion.
"Her (Whitman's) stripping of HPE over time both in terms of internal talent and scope has weakened the firm but, with the continued strength of the brand, Starboard likely sees an upside if more competent management (eventually) takes over or they can broker a sale to another firm," Enderle said. "They tend to like to step into firms with poor leadership and either push to get better skilled top executives in place or for a sale and I would anticipate both in this instance but likely leadership first since that was their path with Yahoo."
HPE shares rose 0.2 percent to close Monday at $23.35. For the year, HPE shares have risen more than 53 percent. The company is scheduled to report its fiscal fourth-quarter results on Nov. 22.
© 2017 San Jose Mercury News
syndicated under contract with NewsEdge/Acquire Media. All rights reserved.