Markets

Insider Trading

Hedge Funds

Retirement

Opinion

Activist Investor Starboard Value LP Plans to Improve Operations of Bloomin’ Brands, Inc. (BLMN)

We recently compiled a list of the Shake-Up Alert: 40 Companies Facing Activist Pressure. In this article, we are going to take a look at where Bloomin’ Brands, Inc. (NASDAQ:BLMN) stands against the other companies facing activist pressure.

The equity market has been on a roll, rallying by 10% in the first half of 2024, adding to the 24% gain registered in 2024. Amid the gains, one would be mistaken to think activist investors would go slowly, given the bumper returns on offer. That is not the case, given that activist investors are becoming more active and bold in a push to squeeze optimum value in the equity markets.

It was arguably one of the busiest years for activist investors as they launched 1,151 campaigns in 2023, up from 1,083 campaigns recorded in 2022. Since 82% of the campaigns revolved around environmental, social, and governance issues, ESG affirms a new wave of activism in the equity markets.

In addition, there was a 7% jump in new activist investor campaigns in 2023 to 252, setting a new record. Likewise, there were 77 first-time activist-initiated campaigns in 2023, up from 55 in 2022, according to data by Lazard. Some of the most targeted sectors with activist campaigns were industrials at 21%, followed by technology at 20% and healthcare at 20%. Consumer and financial sectors accounted for 11% and 8% of the activist campaigns, respectively.

Activist investors can be individuals or institutions that acquire a controlling stake in a target company. With the investment, they gain the much-needed power to push for strategic changes that can unlock hidden value in a company they believe is underperforming. A push for seats on the board is one of the strategies deployed as one way of influencing decision-making and advocating for management changes.

In aggressive cases, activist investors can push for the sale of the entire business or some part of the business to generate shareholder value. Some activist campaigns also involve pushing for restructuring, such as cutting costs to bolster margins.

A push to sell the entire business or split some units were some of the favorite actions pushed by activist investors, in 49% of the activist campaigns last year. Additionally, the activist investors pushed for a change of leadership, with some advocating for streamlining operations through cost cuts to improve margins. Activist investors pushed for management changes in 10% of the campaigns initiated last year following a 46% year-on-year increase in 2022.

Elliot Management, Starboard Value, Trian Partners, and Third Point were some of the top US activist investors at the center of most corporate wars. US activist investors accounted for 14% of the total activist campaigns last year, affirming their influence in pushing for value in various companies. Likewise, ValueAct posted a 39% gain through its campaigns as Caligan Partners rose 37% and Engaged Capital returned 29%. Pershing Square Holdings, spearheaded by activist Bill Ackman, generated a 27% gain.

Activist investors fared much better in 2023 thanks to the rising stock market that shrugged off the high interest rates that had been increased to 22-year highs of 5.25% to 5.50%. Similarly, activist hedge funds also deserve some credit for focusing on market-beating stocks that did much better amid an uncertain market environment. In the end, activist investors enjoyed one of their best years in the recent past, with an average return of 20.2% in 2023. The gains came after the strops had lost an average of 16% in 2022

Activist investors showed no signs of slowing in the first half of 2024, going by 147 new campaigns, surpassing the 2018 record of 143. In the second quarter of 2024, 86 new activist campaigns were recorded, barely a year after a strong rebound.

The heightened activist investor pressure came amid concerns that factors like high interest rates and slowing growth would hurt the company’s performance. Amid a surge in activist investor campaigns in 2024, the success rates of most of the campaigns have dropped significantly. For instance, most of the campaigns in the first half only won 74 board seats, down from 93 as of last year. It is also a concern that activists only secured 11% of their sought-after board seats compared to a 65% win ratio in 2023. The significant decline in success rates affirms that companies are becoming more effective in fending off activist pressure.

Investors are already pushing companies harder for change in 2024, concerned by the impact of soaring geopolitical instability and economic uncertainty. Creating a lower and stable interest rate environment is expected to create more opportunities for activist investors to capitalize. Given that nearly half of the campaigns in 2023 involved a merger and acquisition objective, it is expected to be the case in 2024, especially with the Federal Reserve cutting interest rates.

Reports show that there could be more than $2 trillion in capital set for acquisitions in 2024, and more activist investors are expected to demand companies review their business portfolios. Part of the proposals that activist investors are likely to push for is the divestment of some units or the sale of the entire company.

Even though activist investing is evolving significantly with a renewed focus on industrial investment plays, technology companies are expected to dominate most campaigns in 2024. Nevertheless, the broader situation, including unpredictable interest rates, political instability, and the forthcoming US presidential race, adds complexity, making it harder and longer for activist efforts to succeed.

Our Methodology

Activist campaigns are growing as activist investors look to unlock hidden value in stocks trading below their fair value. Upon sifting through numerous media reports and scanning the Insider Monkey hedge fund database, we came up with the 40 companies facing activist pressure. The stocks are ranked based on the number of hedge funds that own them, as of Q1 2024.

Note: The returns are calculated from the investment date to August 1, 2024.

We also mentioned the number of hedge funds that had bought these stocks during the same filing period. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

The golden glow of the exterior of a modern Upscale Casual Dining restaurant reflecting on a busy street.

Starboard Value LP at Bloomin’ Brands, Inc. (NASDAQ:BLMN)

Stock Return: – 23%

S&P 500 Return: 22.5%

Investment date: 18/08/2023

Number of hedge funds holding stakes: 29

Bloomin’ Brands, Inc. (NASDAQ:BLMN) is the proprietor and manager of casual, upscale casual and high-end dining establishments across the United States and abroad. Its collection of dining venues encompasses Outback Steakhouse, Carrabin’s Italian Grill, Bonefish Grill, and Fleming’s Prime Steakhouse & Wine Bar.

Activist investor Starboard Value has targeted Bloomin’ Brands, Inc. (NASDAQ:BLMN) with plans to improve operations to generate more shareholder value. The activist investor, which owns about 10% of market value, believes the company is undervalued relative to its peers due to poor execution. Bloomin’ Brands, Inc. (NASDAQ:BLMN) is down by about 25% for the year, affirming the underperformance. Insider Monkey database indicates 29 out of 920 hedge funds tracked held stakes in the company as of the end of Q1 2024.

Overall BLMN ranks 29th on our list of the companies facing activist pressure. While we acknowledge the potential of BLMN as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than BLMN and that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.

Disclosure: None. This article is originally published at Insider Monkey.

AI Fire Sale: Insider Monkey’s #1 AI Stock Pick Is On A Steep Discount

Artificial intelligence is the greatest investment opportunity of our lifetime. The time to invest in groundbreaking AI is now, and this stock is a steal!

The whispers are turning into roars.

Artificial intelligence isn’t science fiction anymore.

It’s the revolution reshaping every industry on the planet.

From driverless cars to medical breakthroughs, AI is on the cusp of a global explosion, and savvy investors stand to reap the rewards.

Here’s why this is the prime moment to jump on the AI bandwagon:

Exponential Growth on the Horizon: Forget linear growth – AI is poised for a hockey stick trajectory.

Imagine every sector, from healthcare to finance, infused with superhuman intelligence.

We’re talking disease prediction, hyper-personalized marketing, and automated logistics that streamline everything.

This isn’t a maybe – it’s an inevitability.

Early investors will be the ones positioned to ride the wave of this technological tsunami.

Ground Floor Opportunity: Remember the early days of the internet?

Those who saw the potential of tech giants back then are sitting pretty today.

AI is at a similar inflection point.

We’re not talking about established players – we’re talking about nimble startups with groundbreaking ideas and the potential to become the next Google or Amazon.

This is your chance to get in before the rockets take off!

Disruption is the New Name of the Game: Let’s face it, complacency breeds stagnation.

AI is the ultimate disruptor, and it’s shaking the foundations of traditional industries.

The companies that embrace AI will thrive, while the dinosaurs clinging to outdated methods will be left in the dust.

As an investor, you want to be on the side of the winners, and AI is the winning ticket.

The Talent Pool is Overflowing: The world’s brightest minds are flocking to AI.

From computer scientists to mathematicians, the next generation of innovators is pouring its energy into this field.

This influx of talent guarantees a constant stream of groundbreaking ideas and rapid advancements.

By investing in AI, you’re essentially backing the future.

The future is powered by artificial intelligence, and the time to invest is NOW.

Don’t be a spectator in this technological revolution.

Dive into the AI gold rush and watch your portfolio soar alongside the brightest minds of our generation.

This isn’t just about making money – it’s about being part of the future.

So, buckle up and get ready for the ride of your investment life!

Act Now and Unlock a Potential 10,000% Return: This AI Stock is a Diamond in the Rough (But Our Help is Key!)

The AI revolution is upon us, and savvy investors stand to make a fortune.

But with so many choices, how do you find the hidden gem – the company poised for explosive growth?

That’s where our expertise comes in.

We’ve got the answer, but there’s a twist…

Imagine an AI company so groundbreaking, so far ahead of the curve, that even if its stock price quadrupled today, it would still be considered ridiculously cheap.

That’s the potential you’re looking at. This isn’t just about a decent return – we’re talking about a 10,000% gain over the next decade!

Our research team has identified a hidden gem – an AI company with cutting-edge technology, massive potential, and a current stock price that screams opportunity.

This company boasts the most advanced technology in the AI sector, putting them leagues ahead of competitors.

It’s like having a race car on a go-kart track.

They have a strong possibility of cornering entire markets, becoming the undisputed leader in their field.

Here’s the catch (it’s a good one): To uncover this sleeping giant, you’ll need our exclusive intel.

We want to make sure none of our valued readers miss out on this groundbreaking opportunity!

That’s why we’re slashing the price of our Premium Readership Newsletter by a whopping 70%.

For a ridiculously low price of just $29, you can unlock a year’s worth of in-depth investment research and exclusive insights – that’s less than a single restaurant meal!

Here’s why this is a deal you can’t afford to pass up:

• Access to our Detailed Report on this Game-Changing AI Stock: Our in-depth report dives deep into our #1 AI stock’s groundbreaking technology and massive growth potential.

• 11 New Issues of Our Premium Readership Newsletter: You will also receive 11 new issues and at least one new stock pick per month from our monthly newsletter’s portfolio over the next 12 months. These stocks are handpicked by our research director, Dr. Inan Dogan.

• One free upcoming issue of our 70+ page Quarterly Newsletter: A value of $149

• Bonus Reports: Premium access to members-only fund manager video interviews

• Ad-Free Browsing: Enjoy a year of investment research free from distracting banner and pop-up ads, allowing you to focus on uncovering the next big opportunity.

• 30-Day Money-Back Guarantee:  If you’re not absolutely satisfied with our service, we’ll provide a full refund within 30 days, no questions asked.

 

Space is Limited! Only 1000 spots are available for this exclusive offer. Don’t let this chance slip away – subscribe to our Premium Readership Newsletter today and unlock the potential for a life-changing investment.

Here’s what to do next:

1. Head over to our website and subscribe to our Premium Readership Newsletter for just $29.

2. Enjoy a year of ad-free browsing, exclusive access to our in-depth report on the revolutionary AI company, and the upcoming issues of our Premium Readership Newsletter over the next 12 months.

3. Sit back, relax, and know that you’re backed by our ironclad 30-day money-back guarantee.

Don’t miss out on this incredible opportunity! Subscribe now and take control of your AI investment future!


No worries about auto-renewals! Our 30-Day Money-Back Guarantee applies whether you’re joining us for the first time or renewing your subscription a year later!

A New Dawn is Coming to U.S. Stocks

I work for one of the largest independent financial publishers in the world – representing over 1 million people in 148 countries.

We’re independently funding today’s broadcast to address something on the mind of every investor in America right now…

Should I put my money in Artificial Intelligence?

Here to answer that for us… and give away his No. 1 free AI recommendation… is 50-year Wall Street titan, Marc Chaikin.

Marc’s been a trader, stockbroker, and analyst. He was the head of the options department at a major brokerage firm and is a sought-after expert for CNBC, Fox Business, Barron’s, and Yahoo! Finance…

But what Marc’s most known for is his award-winning stock-rating system. Which determines whether a stock could shoot sky-high in the next three to six months… or come crashing down.

That’s why Marc’s work appears in every Bloomberg and Reuters terminal on the planet…

And is still used by hundreds of banks, hedge funds, and brokerages to track the billions of dollars flowing in and out of stocks each day.

He’s used this system to survive nine bear markets… create three new indices for the Nasdaq… and even predict the brutal bear market of 2022, 90 days in advance.

Click to continue reading…