Starboard Value AUM Grows 26% In Q1

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Jeffrey Smith’s hedge fund Starboard Value LP has filed its 13-f for the first three months of 2013. The document, which shows the long positions held by the hedge fund at the end of March 2013, contains some interesting pointers for value investors trying to develop new strategies for the rest of the year.

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Starboard Value LP was founded by Jeffrey Smith in 2002 and looks to invest in undervalued small cap stocks with a strong emphasis on fundamentals. In the first three months of 2013 the firm added a few choice small caps to its holdings. The firm’s long portfolio was valued at just under $1.1 billion at the end of March.

The biggest addition to the portfolio was a 716,000 share buy into the iShares Russell 2000 Index (ETF) (NYSEARCA:IWM). The index follows 2000 of the smallest listed stocks in the United States. The total add was valued at $67,611,880.

Smith also bought TriQuint Semiconductor (NASDAQ:TQNT) to the tune of 7,178,764 shares valued at $36,324,545, 200,000 shares in Verifone Systems Inc (NYSE:PAY), 475,000 shares in Diebold Incorporated (NYSE:DBD), 750,000shares in VCA Antech Inc (NASDAQ:WOOF), 375,000 shares in Smithfield Foods, Inc. (NYSE:SFD) and 4,275,000 shares in Ferro Corporation (NYSE:FOE).

One of the more interesting moves made by Starboard Value LP was the sale of more than half of its shares in Progress Software Corporation (NASDAQ:PRGS). The asset was one of the biggest holdings in the firm’s portfolio in the last quarter of 2012. So far this year the stock is up just under 10%. Good in any other year, but a booming stock market means bets on stocks like Progress Software Corporation (NASDAQ:PRGS) Aren’t good enough anymore.

Starboard exited its positions in Ameristar Casinos, Inc. (NASDAQ:ASCA), Harry Winston Dominion Diamond Corp (NYSE:DDC), Seacor Holdings Inc. (NYSE:CKH),  MIPS Technologies, which stopped trading during the first quarter of the year, and Viad Corp (NYSE:VVI).

Jeffry Smith has been managing Starboard Value LB incredibly well. Since the end of 2012, the firm’s assets under management have increased by around 26%. At the end of last year the manager had just $880 million under his control.

With the stock market performing like it has in the first months of 2013, firms like Starboard Value LP are almost guaranteed to have a good time. What really matters for small cap equity funds is their performance when things go wrong.

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