Jeff Smith’s Starboard Value Wins – No More Free Breadsticks at Olive Garden

January 10th, 2015
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Who would have thought that Jeff Smith, a 42-year old hedge funder advisor could create a coup d'état and become the next King of the board by simply suggesting that giving away breadsticks needed to stop and pasta water needed to be salted? According to The New York Post, the hedge fund Starboard Value, managed by Jeff Smith, which included the Olive Garden and Red Lobster restaurants within its portfolio, inquired of Darden Restaurants plans to improve profits after their restaurants had not bounced back after the recession.

Darden, the owner of Darden family restaurants for unknown reasons, responded by threatening to close all of the Red Lobster franchises. Investor unrest went ballistic and Darden’s CEO Clarence Otis Jr. resigned while 8 board members quit. The remaining board members were thrown out. After the flour in the kitchen settled, Jeff Smith took his seat at the head of the Darden Board of Directors. Since Jeff Smith’s reign, Darden stock is up 21 percent.

Beyond making a name for itself for reshaping Darden, Staboard Value is also climbing up the hedge fund rankings. The firm is currently ranked #6 on the Top 75 U.S. Equity Focused Emerging Hedge Fund List and #18 on the Top Activist Hedge Fund List.

The moral to this story? More Breadsticks can lead to more problems…
For Detailed Investor Profiles on these Investors, click below:
Starboard Value
Related People: Jeffrey Smith, Mark Mitchell, Peter Feld, Gavin Molinelli, Kenneth Marlin
Related Entities: ; Ramius Capital Group*; Ramius Small-Cap Value*; RCG STARBOARD ADVISORS LLC; Starboard Intermediate Fund; Starboard Value and Opportunity Fund
Related Article Tags: Shareholder Activists, Corporate Raiders and Proxy Battles

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