Starboard Value CEO Jeffrey Smith announced Tuesday that the firm has a stake in $7 billion automobile auction house KAR Auction Services.
Shares of KAR rose more than 3% after the latest reveal from the Starboard chief. Starboard did not disclose the size of its stake in the company.
Smith stressed the importance of the planned spinoff of the Insurance Auto Auctions business from KAR Auction Services as a key value catalyst not yet appreciated by the market. Smith unveiled the new investment from 13D Monitor's 2019 Active-Passive Investor Summit in New York.
KAR announced in 2018 that it would be separating into two public companies, with IAA being one of them. IAA, which claims a sizable market share in the salvage auction services industry, typically auctions cars that are totaled or have very high mileage.
Smith also recommended medical record company Cerner, where Starboard reached a settlement last week.
Cerner announced April 9 that it will add new directors to its board and repurchase more stock after its conversations with Starboard, sending the stock up about 10% during that session. It also said that it would double down on operational performance and that it hired consulting firm AlixPartners to meet those goals.
Activist investors often build positions in what they view as undervalued companies with the goal of advocating for key changes they suspect will drive shareholder value. Those proposed changes can differ depending on the activist and targeted company, ranging from management replacement and board seats to merger proposals.