Starboard Value is an American hedge fund founded in 2002 with more than $9 billion assets under management. In this presentation they share three companies they like in this current market environment: Wix, Splunk and Salesforce.
They write in their presentation that, “Each Company Represents an Opportunity to Own a High-Quality and Sticky Business at an Attractive Valuation with the Potential for Significant Value Creation Through a Better Balance of Growth and Profitability.”
All three companies have had tough years. Wix is down 50% year to date, Splunk is down 33% and Salesforce is down 38%. But Starboard see these three companies as a little different to many of their fast-growing tech peers. Starboard believe these three have a clear path to achieving or growing their profits. And sees all three as significantly underperforming their peers at the moment. So if Starboard are right, and if management can turn these companies around, then they may have the double win of becoming profitable (or in Salesforce’s case improving profits) and then having a multiple expansion to get back in line with their peers.
Or Starboard is wrong and these three companies will continue to underperform their peers. That’s why you’ve always got to do your own research and see if you agree with an experts conclusion. But a few interesting companies to add to the watch list.
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