We recently published a list of Jeff Smith's top 10 activist targets and their returns compared to the S&P 500. In this article, we look at where Healthcare Realty Trust Incorporated (NYSE: HR) stands against other Jeff Smith's top activist targets.
Jeff Smith is undoubtedly the “most feared man” in Corporate America and has played out some of Wall Street's most aggressive and successful activist campaigns. Having joined boards and chaired four of more than 17 companies, he highlights his reputation as one of the most successful activist investors to unlock shareholder value. Smith has become one of the most feared activist investors behind Starboard Value LP, a hedge fund that he founded in 2011 with two partners. Given that hedge funds target hundreds of companies, it highlights a strategy to conduct a detailed analysis to discover stocks below fair value.
In return, Starboard Value LP has always been campaigning for activists, driving strategic changes that could enhance the value of the company. Part of the strategy involves driving boardsheets or management changes. Hedge funds are known to incite the potential sales or entire business of units in a competition for shareholder value. By targeting giants and consumer cyclical stocks over the past decade, Smith has more than doubled the assets of his hedge fund to more than $5.5 billion under management. Furthermore, the average market rating for companies invested by LP exceeded $45 billion, up from around $7 billion in 2020.
Also read David Tepper's portfolio and top 10 growth stocks in billionaire Ken Fisher's top 13 growth stock picks.
Over that period, Starboard Value LP has established a reputation for making things difficult for executives and supervisors who opposed change requests and sometimes fired them. Nevertheless, Jeff Smith's strategy differs greatly from the more confrontational and widely published campaigns of fellow activist investors Carl Icahn and Bill Ackman. After being appointed to Darden's chair, he and other board members acquired shifts and close-ups of the company. Smith learned how to make pizza at Papa John's restaurant.
Starboard Value LP returned less than 5% of investors in 2024, slowing down the performance of its peers. A poor performance happened during a year when Corporate America saw a major upheaval in the boardroom as activist investors fought for change and showed off their muscles like never before. In 2024, activist funds generated an average return of 11.5%. Starboard Value LP's competitor, ValueAct Capital Management, reported a 21% increase in the meantime as Sachem Head Capital Management delivered about 22% using artificial intelligence-driven implementation in the market.
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Amidst the decline in performance in 2024, Jeff Smith's hedge funds still stand out as one of the most successful activist hedge funds. Since its inception, the hedge fund has averaged 25.02% returns on 152 activist campaigns, surpassing the Russell 200, which averaged 13.65% during the same period.
We sifted through financial media coverage and settled on the biggest campaign of activist investors. As Starboard Value LP submitted a campaign, we calculated the long-term returns compared to the S&P 500. Campaigns are ranked chronologically.
Why are hedge funds interested in the stocks they accumulate? The reason is simple. Our research shows that mimic the top stock picks of the best hedge funds can outperform the market. The quarterly newsletter strategy has chosen 14 small and large caps per quarter, returning 373.4% since May 2014, surpassing the benchmark by 218 percentage points (see more here).
Healthcare Realty Trust Incorporated (HR): Among Jeff Smith's top activist targets
The aerial view of a luxurious luxury hotel in a US location shows the size of the business operated by the company.
Started position: November 2024
Stake Value: n/a
Stock returns from November 2024 to April 2025: -11.14%
S&P 500 will return from November 2024 to April 2025: -10.35%
Number of hedge funds holding interests: 29
Healthcare Realty Trust Incorporated (NYSE: HR) is a real estate investment trust (REIT) that owns and operates medical outpatient buildings on market-leading hospital campuses. Its portfolio includes over 650 properties. Starboard Value LP confirmed the company's 5.9% stake on November 26, 2024 and began pushing board sheets to influence decision-making.
Activist investors signed a contract with a healthcare-centric REIT, securing four seats to the board, including an independent chair of the board. The board seat push came on Starboard Value LP, which is linked to the impact of the 2022 Healthcare Trust of America's $18 billion acquisition.
After the acquisition merged, real estate operating expenses skyrocketed from 31% to 37%, while stock prices fell by about 15%. With voices on the board, Starboard Value LP is well positioned to drive initiatives that unleash value from strengthening acquisitions and operational margins.
Overall, HR ranks second on Jeff Smith's list of top activist targets. We acknowledge the potential of HR, but our belief lies in the belief that AI stocks offer higher returns and hold a greater promise to do so within a shorter time frame. There have been AI stocks that have risen since the beginning of 2025, and the popular AI stocks have lost around 25%. If you're looking for AI stocks that are more promising than HR but are trading at less than five times the revenue, check out this report on the cheapest AI stocks.
Read next: According to the billionaire, buy 20 best AI stocks to buy now and the best best stocks to buy now.
Disclosure: None. This article was originally published on Insider Monkey.
