Although everyday investors are generally best off not copying the money moves they see in 13F reports from the top hedge fund leaders around the country, there is still something to be said for tracking the way that billionaire leaders of investing move their assets around. 13F reports, required each quarter by the SEC of firms operating with at least $100 million in AUM, show the state of a firm's holdings as of the end of the previous quarter. They are delayed by about 6 weeks, meaning that the information could be highly outdated. Nonetheless, they are useful for tracking trends among the top investors. Jeff Smith, the leader of Starboard Value, is one of the investors that is closely watched in this way. Smith's fund sold out of a number of positions in staples and discretionary in Q2 of this year.
Starboard Sells Colgate-Palmolive, Clubcorp, and More
According to the 13F, filed days ago in advance of the August 15 deadline, Smith's Starboard Value sold out of four positions in the past quarter. These include Colgate-Palmolive (CL), Clubcorp Holdings (MYCC), Tribune Media (TRCO), and Pinnacle Entertainment (PNK). Generally, Barron's views the eliminated positions as representing a shift away from staples and discretionary by Smith's fund.
At the same time, Starboard also increased the size of some of its other positions. Notably, the firm bought additional shares of preexisting holdings in iShares Russell 2000 Value ETF (IWN) and Advance Auto Parts (AAP). It reduced its puts in the iShares Russell 2000 ETF (IWM) and also added additional shares to its stake in Hewlett Packard Enterprise (HPE). AAP makes up about 10.7% of the firms portfolio, while HPE makes up another 5.1% of the assets under management.
New Positions in Forest City and More
Over the second quarter, Smith's fund also entered into several new positions. The most notable of these, perhaps, is a new position in Forest City Enterprises (FCE-A), which now constitutes more than 3% of the fund's portfolio. Starboard also added stakes in WebMD (WBMD), ILG (ILG), Koninklijke Philips (PHG), and Spirit Realty Capital (SRC) during the same time.
Starboard is known as an activist fund, meaning that it often buys up large swatchs of shares in target companies with an eye toward influencing those businesses' practices in order to generate better value for shareholders. Many expected an activist campaign when Starboard bought up a significant stake (more than $124 million) in HPE in the third quarter of 2016. The fact that Smith is shoring up his investment with additional purchases means that this tactic may still be in play, although it is also possible that the position has diminished in size since the end of Q2 on June 30.