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An activist investor is knocking at Box - data shows he may get what he wants

2 months ago by Jon Marino in Investor Profile

Starboard portfolio manager Jeff Smith tends to get what he wants, and it tends to be good for everyone else. 

Just ask the good folks at Darden ($NYSE:DRI), who saw shares skyrocket in the wake of the Starboard Capital (where Smith manages money) buy into the company and agitate - and succeed - in having the company cleave off its Red Lobster asset and to dump the seafood dining concept. What Jeff wants, Jeff gets, and chances are, what's good for the Jeff is good for the gander. 

Our first chart tracks job postings at Box ($NYSE:BOX), the target of Smith's investment and advice. And that advice, pointedly, is to look for a deal - in its filing, Starboard stated its involvement could bring "recommendations about ownership structure, board makeup, capitalization and or potential business combinations."

Job postings at Box appear to have fallen by a third already this year - as share price dropped, as well - so there are multiple things pressuring Box CEO Aaron Levie to keep costs down right now. 

In the tech sector, it's common to see companies cutting job postings en masse right before an M&A transaction. They're potentially looking at synergies galore - so further headcount growth isn't exactly necessary, even if the company and/or its target has growth plans - and synergies typically mean job cuts, not postings.

It's not just tech companies either - this trend exists all across the Fortune 500. So, it's possible that Box and Starboard may have already begun to consider what it needs to do to keep its new largest activist shareholder happy. 

And our next chart tracks job postings with Box's biggest competitor - Dropbox ($NYSE:DBX). Dropbox posted a drop in job postings as well, since this year began - down more than 25% from their 2019 peak. Dropbox shares have also fallen more than 30% over the last month. But the market clearly thinks Dropbox and Box could be a match for each other - after Box stock rose more than 10%, Dropbox stock shot up for 2.5%, well ahead of the pace of market gains. 

Box stock locked up gains in early trading Wednesday - but the company has still lost more than 30% of its value over the last 12 months. Perhaps Smith is right, and the world needs a little more cloud storage - but a few less companies managing it. But first, he has to get Box to go along with the plan. 

About the Data: 

Thinknum tracks companies using information they post online - jobs, social and web traffic, product sales and app ratings - and creates data sets that measure factors like hiring, revenue and foot traffic. Data sets may not be fully comprehensive (they only account for what is available on the web), but they can be used to gauge performance factors like staffing and sales. 

Further Reading: 

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Jon Marino

Jon Marino is Thinknum's finance editor, covering the impacts of alternative data on public companies and investors. Prior to joining Thinknum, Jon worked in the ...

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