Starboard Value CEO Smith: Our best investment idea is Perrigo

Key Points
  • Starboard Value Jeffrey Smith pitched store-brand pharmaceutical company Perrigo and Yahoo successor Altaba as his best ideas Tuesday.
  • Smith said that Perrigo also does not face the same online challenge from Amazon as many other retailers.
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Starboard Value CEO Jeff Smith: Perrigo and Altaba are our top stock picks

Starboard Value Jeffrey Smith pitched store-brand pharmaceutical company Perrigo as his best investment idea now, during a conference Tuesday.

In addition to Perrigo, Smith also advocated for Altaba, the former Yahoo, which he said will benefit from tax reform once it makes its way through Congress.

Perrigo makes versions of ibuprofen, liquid cold medicines and other products that fly under the name of retailers including CVS. The stock has fallen in recent years, but Smith said it presents strong value for investors.

"It's a beautiful business, and store-brand as a whole is actually a much larger business than any one brand," Smith said during the Delivering Alpha conference presented by CNBC and Institutional Investor in New York Tuesday.

Shares jumped more than 4 percent in morning trade.

Smith said that Perrigo also does not face the same online challenge from Amazon as many other retailers.

"While Amazon poses a real threat to many consumer companies, we actually believe it represents a very large opportunity for Perrigo, who is the store brand manufacturer," he said.

Smith is the CEO at Starboard Value. He is an activist investor and has been able to influence a number of companies by getting board members appointed. This year he placed five members on the board of Perrigo in addition to two new ones who came on late in 2016.

Earlier this year, he stressed the need for tax reform, particularly in allowing companies to bring back profits stored overseas at lower rates.

Smith said Altaba would be well-positioned to benefit once Congress agrees on a tax plan. In addition to repatriation, Republicans and the Trump administration are pushing for lower corporate and personal taxes.

This version clarifies an earlier accounting of the new board members at Perrigo.