Home Depot's stock, boosted in recent weeks by takeover speculation, is down less than 1% this year. The retailer has a current market capitalization of about $82 billion.
"We see today's event as supporting our view that Home Depot's shares are undervalued," Deutsche Bank analyst Mike Baker said in a research note.
Whitworth promises to be "persistent and tenacious."
"We will stay at this until one thing happens and (that means) these assets are properly valued in the public marketplace," Whitworth told CNBC's "Closing Bell," which he says equates to a 50% increase in the stock price. "That can happen with a very simple fix: refocus on the core business, get out of this supply business, take the cash out of that and give it to shareholders in dividends or share repurchases."
He said that since Home Depot Chairman and CEO Robert Nardelli took office in 2000, the stock has risen "less than a T-Bill, or about 1%" while Nardelli "took $330 million out of the company" over that period. Whitworth said Lowe's share price has risen about 21% over the same period, while its chief was paid $60 million. "That is a smoking gun," he told CNBC.
Another Proposal Submitted
Richard Ferlauto, director of pension and benefit policy for the American Federation of State, County and Municipal Employees, on Monday said his group submitted a Home Depot shareholder proposal for 2007 that would amend the company's bylaws to split the roles of chairman and chief executive.
Specifically, the proposal calls for the chairman to be "independent" from the corporation, according to a copy sent to Reuters.
A similar proposal failed to pass at this year's Home Depot annual meeting but garnered 41% support.
"The board is not committed to real substantive change so activist shareholders will be joining together to mount various challenges," said Ferlauto, a critic of the pay package of Home Depot's Nardelli.
The investor attention comes as the cooling U.S. housing market hurts results. Home Depot's earnings fell more than 3% in the third quarter ended Oct. 29, while sales at stores open at least a year, a key retail measure, dropped 5.1%.
Earlier this month, Home Depot said that errors tied to backdating of some stock option grants resulted in unrecorded expenses of about $200 million. A review conducted by outside counsel found no wrongdoing on the part of current management or the board, it added.
The Securities and Exchange Commission is reviewing Home Depot's stock-option practices, and the U.S. Attorney for the Southern District of New York has requested information.