Hedge Funds

Hedge fund manager Cliff Robbins reveals he's one of the largest holders in software company Open Text, calls it 'mispriced'

Key Points
  • "We're looking at this and saying this is an incredible investment opportunity for us," Robbins said.
  • "If they make another transformation acquisition, like Documentum — or sell the company, which is always possible in the software space — their return opportunities could be significantly higher than this," Robbins added.
Cliff Robbins, founder Blue Harbor Group
Adam Jeffery | CNBC

Blue Harbour Group Chief Executive Cliff Robbins revealed that he's one of the largest investors in Open Text, a maker of enterprise software based in Canada.

The fund manager also noted that a third party could acquire the company given recent consolidation in the software industry.

"We're looking at this and saying this is an incredible investment opportunity for us," Robbins said. "Our models tell us that this company is going to earn about 3.30 [Canadian dollars] a share in just about 18 months. If they make another transformation acquisition, like Documentum — or sell the company, which is always possible in the software space — their return opportunities could be significantly higher than this."

"They're really great at M&A and have a private equity approach," he added. It's a "very mispriced and inexpensive company."

He delivered his comments at the 13D Monitor Active-Passive Investor Summit in New York. With a $400 million investment, Blue Harbour currently holds roughly 4 percent of shares.

Shares rallied more than 4 percent after Robbins' remarks. Open Text declined to comment on this story.

Founded in 1991, Open Text is a software company with products including enterprise content management and cloud technology. It acquired enterprise content platform Documentum from Dell EMC's enterprise content division for $1.62 billion in 2017. Its current market cap is about $10 billion.

Robbins founded Blue Harbour in 2004 and invests in undervalued companies and engages with management teams and boards of directors to try to create value in the company. Blue Harbour made headlines last year after it revealed a roughly 6.2 percent position in Adient, making the activist investor one of the automotive-seat supplier's biggest shareholders.