Smith pointed out that these three companies are held by him in different percentages, and that unfortunately, although the companies themselves predicted impressive growth rates, they avoided translating this growth into profitability on the ground, thus hurting their investors and Starboard’s.
Starboard is one of the busiest companies in the field of active investment, and it has had great success in recent years, mainly by bringing in new directors into the companies it invests in, when these usually help take the company in the right direction.
These companies have grown at a very fast rate in recent years, but at the beginning of this year, and as the interest rate in the market increased, many investors stopped investing in the shares of these companies, mainly against the background of the fact that they stopped believing in the company’s ability to grow in the future, thus crashing the markets.
Regarding the company WIX, which Starboard owns at a rate of about 9%, the fund manager said that he approved the company’s plan to cut increases, which WIX previously reported, although he still believes that other things will have to be changed if the company really wants to reach a total FCF of over to 20% until 2025.
“We anticipate that Wix should aim for a profit margin range of about 25%, which will allow it to become a company whose growth prospects are greater.”
These three companies have fallen between 37-54% since the beginning of the year. On the other hand, since Starboard’s report, companies have risen between 2.3-4.6%. In the interview that Smith gave to the press, the investor said that he prioritizes increasing the market share that the managers of the companies give to their investors – that is, increasing the value of the company.
Smith added that in the context of Salesforce – it has the leading market policy among the companies in which he invests, he also noted to praise the competition policy which the company manages with maximum efficiency. “The company wins in the market in which it operates, it is important to us that the company wins for its investors – this is why we are involved in it,” said Smith.
On the other hand, Smith noted how Salesforce recently announced a series of targets that it would like to buy, and those that he believes will translate to similar results or even below the forecasts of its competitors, despite the fact that Salesforce’s activity is greater than the competitors. “Salesforce trades at a multiple of between 10-12 on FCF, when competitors trade at a multiple of about 20 to 25,” Smith noted.
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