Thanks to the Fed's 6 years of ZIRP, activism, i.e., loud, brash billionaires who come in and tell a company's management they need to use cheap debt to repurchase stock, engage in reckless M&A or spin off profitable units or they will become even louder and brasher has become one of the only profitable hedge fund strategies. Of course, this will cease the moments rates show even the smallest hint of rising but until then it is paradise for all activist hedge funds.
Activist investor Jeff Smith, who runs hedge fund Starboard Value, wants to to make a change to Olive Garden's famous unlimited breadsticks and salad. Smith's fund owns an 8.8% in the restaurant group's stock.
Alibaba Group Holding Ltd (BABA) just had the biggest Initial Public Offering (IPO) in the history of the US market. This boded well for Yahoo! Inc. (YHOO), selling 122 million Alibaba shares and making $8.3 billion before tax. But the IPO also raised eye brows on Yahoo’s current valuation that marks Yahoo’s core business as almost worthless.
Tim Armstrong is a happy man today. The AOL CEO just got an important vote of confidence from investors, surviving a challenge from activist hedge fund Starboard Value at the company's annual shareholders' meeting. Starboard failed to secure any of the three board seats it had targeted, with all of AOL's current directors winning reelection.
For quite some time, many thought that AOL, Inc. (NYSE:AOL) would be acquired by Yahoo! Inc. (NASDAQ:YHOO) in the near future. There were many reasons supporting this line of thought. For one, Yahoo is currently sitting on more than $12 billion in cash after its payday form the Alibaba Group Holding Ltd (NYSE:BABA) IPO.
Starboard Value, the activist hedge fund that seeks to replace three of AOL's directors with its own nominees next month, has laid out its disagreements with the internet giant's current management in a 96-page presentation to investors.
Whether you agree with Starboard, which owns 5.3% of AOL, or have faith in chairman Tim Armstrong, the presentation makes for some hair-curling reading