Starboard's Smith sees 'a lot of opportunity' in Yahoo

A Yahoo logo is pictured in front of a building in Rolle, 30 km (19 miles) east of Geneva, in this file picture taken December 12, 2012. REUTERS/Denis Balibouse

BOSTON (Reuters) - Activist hedge fund manager Jeffrey Smith, who has publicly criticized Yahoo Inc Chief Executive Officer Marissa Mayer, said on Friday he sees “a lot of opportunity” in the company.

Smith’s Starboard Value has threatened to run a proxy contest raising pressure on the company’s board to remove Mayer.

But in his remarks on Friday at the MIT Sloan Investment Conference, he did not tip his hand any further on what the firm plans to do with Yahoo, saying only that it was in an “interesting situation.”

Maintaining he could not say too much, Smith said he sees plenty of value in the company but noted that it has not had “terrific results” improving operations.

He said his firm, one of the most activist hedge funds, has been working behind the scenes with Yahoo for more than a year. The deadline to announce board directors is coming up next month.

Starboard Value has placed some 150 people on boards in the last 10 years and Smith said that many board members who once appeared sluggish often shape up when an activist arrives on the board. “The light bulb will go off and they do a better job. Sometimes they’ll turn around so fast that we have sometimes put them on other boards,” he said.

Reacting to criticism, often from corporations, that activist investors often ride in with plans to earn a lot of money in a short time period, Smith said his team rolls ups its sleeves and digs in to work with management on operational issues, often sticking around for a long time.

Simply calling for a company to buy back shares “is not a plan,” Smith said adding “that does not create value.”

Reporting by Svea Herbst-Bayliss; Editing by Tom Brown