An activist investor hedge fund, which publicly pushed for Salesforce to make a number of changes three years ago, has bought 50% more CRM stock amid a sharp dip in its value.
Starboard Value had reported owning 849,679 shares in the cloud giant at the end of Q1, but that figure stood at 1.3M shares by June 30, according to a regulatory filing on Thursday.
Salesforce, which has a market cap of $223B, has recently suffered a sharp drop in stock price – which has fallen by nearly 30% in six months.
Activist Investors: Are We Reliving 2022?
Three years ago, Salesforce came under intense pressure from a number of activist investors. Salesforce Ben reported on this at the time.
Third Point, ValueAct, Inclusive Capital, Elliot Management, and Starboard Value started pushing for better margins and operational efficiency, compelling Salesforce to rethink many of its growth strategies.
But many who publicly demanded changes cut their stakes or exited completely by mid-2023 after the cloud giant reported better results and brought in a new director to the board, amid other changes.
The return of Starboard – which has a reputation to revisit previous investments if a company is seen as backsliding on promises – means we may be returning to the combative zeitgeist of 2022.
Salesforce’s stock price increased by nearly 100% in 2023, but the Chief Executive of Starboard, Jeffrey Smith, said in 2024 that the company could still be made to be more efficient and profitable.
Starboard also boosted its holding in Pfizer by 10.5% to 8.5M shares, less than one year after unveiling a $1B stake in the company and pushing for it to improve performance, Reuters reports.
Salesforce Ben has contacted Starboard for comment.
Final Thoughts
Salesforce will likely not be thrilled at the prospect of another public battle with activist investors – and extra salt is arguably already in the wound due to the fact that Starboard is taking advantage of a significant drop in stock price.
But Salesforce survived the first battle three years ago. We shall be watching to see if this stock purchase leads to a reliving of 2022 – and if it does, what implications it has for the ecosystem.
