The Billionaire Move Nobody Saw Coming: Why Starboard Value Abandoned CRM For These 2 Stocks
Jeff Smith exited CRM after activist pressure delivered a $25 billion buyback and strong EPS beats, then pivoted into distressed LW and KMX. Riot Platforms surged 90% year to date anchored by a $636…
Jeff Smith exited CRM after activist pressure delivered a $25 billion buyback and strong EPS beats, then pivoted into distressed LW and KMX. Riot Pla
Read Full Story at Yahoo Finance →Why This Matters
The departure from CRM signals a high-stakes gamble on volatility, revealing how activist investors are increasingly willing to abandon tech giants for perceived undervalued plays in distressed sectors. This pivot underscores a broader shift toward opportunistic distress investing, where deep-value hunters target companies with temporary setbacks rather than long-term growth narratives.
Background Context
Starboard Value’s exit from Salesforce follows years of activist pressure to unlock shareholder value, culminating in a $25 billion buyback that temporarily satisfied demands. Meanwhile, LW (Lamb Weston) and KMX (CarMax) operate in sectors—processed foods and used auto retail—where macroeconomic headwinds like inflation and supply chain disruptions have masked underlying operational strengths.
What Happens Next
If LW and KMX fail to meet margin recovery expectations, Starboard may face shareholder scrutiny over its thesis, potentially triggering further activist campaigns. Investors should watch for Q3 earnings reports from both companies to gauge whether the activist’s bet on operational turnarounds is justified or if this is a high-risk, high-reward gamble.
Bigger Picture
This move reflects a growing trend of activist investors chasing cyclical recovery plays over growth stocks, betting on margin compression easing in 2025. The strategy also highlights how traditional value investors are increasingly targeting sectors once dismissed as "value traps," blurring lines between distressed and growth investing.
