Autodesk (ADSK +3%) is experiencing a boost as activist investor Starboard Value aims to initiate a proxy battle at the 3D CAD software company. Starboard, holding a $500 million stake (~1% of shares) in Autodesk, expressed concerns in a shareholder letter about the stock's underperformance compared to the broader software market.
- Starboard criticized Autodesk for missing Investor Day targets, lacking management credibility, and having governance issues. The hedge fund noted that Autodesk's spending exceeds that of its peers, resulting in underperforming operating margins. Starboard also highlighted a lack of clarity on the financial impact of recent cost-cutting measures, including a 9% workforce reduction.
- Starboard believes Autodesk is not maximizing its potential value, especially given its software's extensive use in construction, automotive, media, and entertainment sectors. The hedge fund plans to nominate directors at Autodesk's Annual Meeting to push for 45% adjusted operating margins by FY28 and higher incremental margins on growth.
- Starboard previously urged Autodesk to replace CEO Andrew Anagnost, citing similar concerns. Although the CEO was not mentioned in the latest letter, he may face challenges. Autodesk has previously resisted Starboard's attempts to place representatives on the Board, with courts siding with Autodesk on not reopening nominations for a contested election.
Autodesk's recent Q4 report was disappointing, with uncertainties in guidance due to tariffs and headcount reductions. CEO Andrew Anagnost mentioned reallocating savings towards strategic priorities like the cloud and AI, a direction Starboard questions, seeking more details.
Starboard Value's letter could signal significant changes at Autodesk. Despite potential macroeconomic volatility, Starboard and shareholders believe Autodesk should perform better, contributing to the stock's rise today.
