This Leading Hedge Fund Has $1 Billion Invested in These 3 Stocks

The clue is in the description. Activist hedge fund Starboard Value tends to invest in companies with a view to helping them unlock the potential in the business. The formula usually involves encouraging management to restructure the company in order to improve profit margins in line with its peers. Successes include turnarounds at Darden Restaurants and Marvell Technology after Starboard placed directors on the board. Based on the fund's last 13F filing at the SEC, the fund holds over $1 billion in three stocks: auto parts retailer Advance Auto Parts (NYSE: AAP), engineering consultancy AECOM (NYSE: ACM), and agriscience company Corteva (NYSE: CTVA). Let's take a look.

It's fair to say that the auto parts retailer hasn't lived up to expectations since Starboard's involvement in 2015. Back then, the hope was that Advance would be able to raise its earnings margin toward its peers, O'Reilly Automotive and AutoZone. But the reality has been continued underperformance. For reference in the chart below, EBITDA is earnings before interest, taxation, depreciation, and amortization.