In a recent publication, we presented a comprehensive analysis titled Jeff Smiths Top 10 Activist Targets and Their Returns Compared to the S&P 500. This article aims to delve deeper into the positioning of Kenvue Inc. (NYSE:KVUE) in the context of the renowned activist investor Jeff Smiths portfolio.

Jeff Smith has earned a reputation as one of the most formidable figures in corporate America, often referred to as the most feared man in the realm of activist investing. His approach has led to some of the most aggressive and successful campaigns on Wall Street, showcasing his ability to unlock significant shareholder value. Smiths impressive track record is highlighted by his service on the boards of over 17 companies and his role as chair for four of them, solidifying his status as a preeminent activist investor.

Smith is the co-founder of Starboard Value LP, a hedge fund established in 2011 alongside two partners. The firm has made a name for itself by targeting hundreds of companies, driven by a strategy focused on rigorous analysis to identify stocks that are undervalued in the market. This meticulous approach has allowed Smith and his team to uncover numerous opportunities for investment, often resulting in substantial returns.

Starboard Value LP is renowned for its activist campaigns that advocate for strategic changes aimed at enhancing corporate value. Such strategies often involve pushing for board seats, advocating for management changes, and sometimes even calling for the sale of business units or entire companies. Over the past decade, Smith has predominantly targeted major players in the IT and consumer cyclical sectors, leading to a remarkable increase in the hedge funds assets under management, which have more than doubled to exceed $5.5 billion. Furthermore, the average market valuation of the companies Starboard has invested in has soared from approximately $7 billion in 2020 to over $45 billion today.

Starboard Value LP has garnered a reputation for its tenacity in dealing with executives and directors who resist its calls for change, often leading to the dismissal of those who do not align with its vision. Despite this confrontational edge, Jeff Smiths tactics differ sharply from those of other well-known activist investors, such as Carl Icahn and Bill Ackman. For instance, after assuming the chairmanship at Darden Restaurants, Smith and his board colleagues took a hands-on approach, even working shifts to gain first-hand insights into the operations. He famously learned how to make pizza while collaborating with Papa Johns, a company he previously chaired, before launching an activist campaign aimed at unlocking its value.

However, the performance of Starboard Value LP has faced scrutiny recently. In 2024, the hedge fund reported a return of less than 5% for its investors, marking a notable underperformance compared to its peers. This decline occurred against a backdrop of significant upheaval within corporate America, as activist investors increasingly vied for influence in boardrooms. During the same period, activist funds collectively achieved an average return of 11.5%. Notably, competing firms such as ValueAct Capital Management and Sachem Head Capital Management reported impressive gains of 21% and approximately 22%, respectively, largely benefiting from the recent artificial intelligence-driven market surge.