Starboard Reports 17% Stake in Quantum Corp (QTM); Nominates New Directors

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Starboard Value, a fund led by Jeff Smith, has reported an activist stake in the small cap data protection company Quantum Corp (NYSE:QTM), which amasses 16.6% of the common stock. Starboard revealed holding over 44.24 million shares of the company, including shares underlying convertible subordinated notes. In its latest 13F, the fund revealed holding close to 26.70 million common shares of the company and 30.55 million shares held in form of 4.5% notes.

Jeff Smith with sword

Moreover, the fund has disclosed its nominees to be elected to the company’s board at the next shareholders meeting of the company, who are:  Christopher F. Crowell, Dale L. Fuller and Edward Terino. According to an earlier Settlement Agreement, Quantum Corp (NYSE:QTM) agreed to appoint Jeffrey Smith to the Board.

“Starboard has engaged, and intends to continue to engage, in discussions with management and the Board regarding the nomination of directors at the 2014 Annual Meeting and the composition of the Board, generally.  It remains Starboard’s preference to work constructively with management and the Board to reach a mutually agreeable resolution to avoid a proxy contest,” the filing with the SEC said.

For the last fiscal year, which ended March 31, the company reported a 6% decline in revenue, which amounted to $553.2 million. the company also disclosed a GAAP net loss of $21.5 million, a 60% gain on the year. Moreover,Quantum Corp (NYSE:QTM) said in a statement, it expects its revenue to be in the range between $540 million and $550 million for the current fiscal year. At the same time, the outlook provides a GAAP gross margin of 44.6% to 45.6%.

In addition, the stock of Quantum Corp (NYSE:QTM) trails a forward P/E of over 11, and a Price/Earnings-to-Growth ratio of nearly 1.00. Aside from Starboard, another hedge fund holding shares of Quantum is Gregg J. Powers‘ Private Capital Management, which held around 11.2 million shares as of the end of 2013. At the same time, while Private Capital declined its stake by around 48% on the quarter, Amici Capital, led by Paul Orlin and Alex Porter, added around 50% to its holding, which amassed around 7.32 million shares.

Disclosure: none

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