When a fund takes a new position in a company ahead of an important conference the outcome can be explosive. Activist fund Starboard Value announced in an SEC filing on April 22nd that they took a new position in Infoblox. If CEO Jeffrey Smith follows prior patterns he will tout BLOX at the Sohn Conference later this week.
NEW BULLISH Plays
BLOX - Infoblox - Company Profile
Infoblox designs, develops, manufactures and sells network control solutions worldwide. Their primary product manages domain servers handling the routing of Domain Name Systems (DNS). In order for the Internet to work a domain name like OptionInvestor.com has to be converted to an actual IP address by looking up the DNS in a domain server or appliance. Because of the security issues surrounding this process the DNS system is a high priority and highly dynamic process.
I know that sounds kind of wonky but Infoblox has created an entire suite of products that make the process easy and secure.
Earnings May 26th.
Activist investor Starboard Value is the same fund that attacked Yahoo, Depomed, Macys, Advance Auto Parts and Darden Restaurants to name a few. They were just awarded a four board seats on the Yahoo board.
Starboard announced a 7% stake in BLOX on the 22nd saying the shares were undervalued. This suggests Starboard is about to announce changes they would like to see to improve shareholder value at BLOX. With the Sohn conference later this week, Smith typically announces his new projects in hopes of seeing a bump in the stock price and instilling a little fear in the board of the company to be attacked.
Last week the head of sales for BLOX left the company and the CEO is filling his spot temporarily. That sounds like a possibility for Starboard to agitate for change.
I am proposing we take a position in BLOX ahead of the Sohn Conference in hopes Starboard touts his new position. The stock has rallied to $17 where it came to a dead stop. A breakout over $17 could be explosive.
Buy BLOX shares, currently $16.99, initial stop loss $16.00
NEW BEARISH Plays
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