Activist investor Starboard announces its stake in Salesforce and sees significant opportunities

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Starboard Value participated Foreclosure, With founder Jeff Smith, CNBC’s David Faber said a significant opportunity remains in the enterprise software maker.

Dow component Salesforce was up more than 4% on the news Tuesday.

Still, Salesforce’s stock is down nearly 40% this year. The company issued disappointing guidance for fiscal 2023 in August, in part due to negative currency effects.

Smith told Faber the stake was substantial without specifying the dollar amount.

The hedge fund manager said most of Salesforce’s valuation discount at the moment is due to an “underperforming mix of growth and profitability.” Smith added that the software company hasn’t achieved significant operational leverage compared to peers in recent years.

“Salesforce has become ingrained in the fabric of so many companies and has become so integral to the way they operate and conduct business,” Smith told Faber in an interview, saying he would like to invest in the company for the long term.

Starboard also built a new stake in the software name splunkBet it could be a takeover target.

Starboard’s CEO has remained a prolific activist investor throughout the Covid pandemic, calling for changes at Humana, Kohl’s, Mercury Systems and others.

Starboard Value has approximately $6.2 billion in assets under management through the first quarter of 2020, according to filings.