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Starboard Increases Salesforce Stake Amid Stock Weakness

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Activist hedge fund Starboard Value, which first pushed for changes at Salesforce (CRM.N) three years ago, raised its stake in the U.S. software company by nearly 50% in the second quarter, according to a regulatory filing on Thursday.

As of June 30, Starboard owned 1.3 million shares, up from 849,679 shares at the end of the first quarter when it had already boosted its stake by almost 52%. The move comes amid a nearly 30% drop in Salesforce’s stock price since January and a 9% decline over the past year.

Salesforce, valued at $223 billion, faced pressure from activist investors in late 2022 and early 2023. Many of these investors reduced or exited their positions after the company reported strong results, added a new board director, and implemented other changes. Starboard, known for revisiting past investments if a company backslides on promised reforms, appears to be increasing pressure again.

Starboard CEO Jeffrey Smith previously said Salesforce still had potential to improve efficiency and profitability. The hedge fund also boosted its stake in Pfizer (PFE.N) by 10.5% to 8.5 million shares and reduced its holding in Autodesk (ADSK.O) by nearly 27% after settling a prior engagement with the company.

The filing is a 13F report, which reflects fund holdings at the end of the previous quarter and is closely watched for insights into investment trends.

Starboard Revives Proxy Fight with CEO Smith’s Nomination to Autodesk Board

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Starboard Value has renewed its proxy fight with Autodesk by nominating three director candidates, including its founder and CEO Jeff Smith, to the engineering and design software company’s board. The hedge fund, which holds a $500 million stake in Autodesk, aims to address concerns about the company’s margin growth and overall performance.

Nominations and Proxy Battle

In addition to Jeff Smith, Starboard has nominated Geoff Ribar, former CFO of Cadence Design Systems, and Christie Simons, a senior partner at Deloitte & Touche, to Autodesk’s 13-member board. Ribar also serves on the board of Acacia Research, a Starboard-backed company, while Simons recently joined Micron’s board.

The move comes nearly a year after a failed attempt by Starboard to push its own slate of director candidates. The hedge fund has criticized Autodesk for overspending compared to its software peers and for underperforming the market, pointing out that Autodesk’s shares have fallen over 7% this year, compared to a modest 1.8% drop in the S&P 500.

Autodesk’s Response and Future Plans

Autodesk has stated that its strategy is working and pointed to the addition of two independent board members in December 2024. The company expressed openness to meeting with Starboard’s nominees but raised concerns about the selection of candidates, questioning their alignment with Starboard’s opportunistic interests.

Starboard’s push for change is seen by some investors as a potential catalyst for increased cost management, enhanced accountability, and a greater focus on AI and cloud technologies, which could create value and improve Autodesk’s financial outlook.

Autodesk has already offered the hedge fund a chance to participate in the process that led to the appointment of the two new directors, including former Kraft Foods CEO John Cahill and Emerson’s COO Ram Krishnan.