Cristiano Amoruso, an analyst at hedge fund Starboard, is leaving the firm for a new gig at Lion Point, a global special situations fund which launched on April 1st. We’ve heard this from two sources.
This would be boring news, except for the fact that Amoruso was a key part of the team at Starboard who helped the firm score a big win earlier this year in its activist campaign against Yahoo and CEO Marissa Mayer.
Last fall, Starboard manager named Jeff Smith sent an open letter to Mayer and the Yahoo board announcing that his firm had taken a large stake in Yahoo. He said that he had ideas for how Mayer and the board could better run the company.
These ideas read like a list of demands because the letter contained an implicit threat: either Mayer would cooperate, or Smith would take his case to his fellow Yahoo shareholders and try to get a new board of directors hired.
Smith’s biggest demand: Yahoo could and should find a way to sell its $US40 billion stake in Chinese Internet company Alibaba in a tax-free fashion and return all of the proceeds back to shareholders.
This was a huge ask. For years, Yahoo and her management team had been planning on ways it could spend those billions of dollars. Wild ideas had been floated. Maybe Yahoo would buy a cable network? Maybe it would poach YouTube stars?
But Yahoo’s shareholders took Starboard’s side and pressed its case in meetings with Mayer and the Yahoo board. Yahoo CFO Ken Goldman was persuaded. So, eventually, was Mayer.
In January, Yahoo announced that it would spin-off its stake in Alibaba by creating a new company. The split is set to happen by the end of this year. Mayer and Yahoo will not have billions of dollars to invest in returning Yahoo to revenue growth.
The view on Wall Street was that Yahoo shareholders, thanks to Smith, had won.
This victory was made possible by an entire team at Starboard, of course. Amoruso was on that team, and, early on, he made a critical play.
During the summer of 2014, months before Smith sent his letter to Yahoo, another, smaller, activist investor named Eric Jackson reached out to Starboard to pitch an activist campaign against Yahoo.
Smith and a couple of his analysts heard Jackson out. One of these analysts was Amoruso. Smith included him because Amoruso had written a case study about Yahoo when he was an MBA candidate at Columbia.
Jackson’s idea was that Yahoo could save itself a huge tax bill by selling itself outright to Alibaba.
Smith and his analysts investigated the idea. They decided that Alibaba was unlikely to buy Yahoo. They were about to pass.
Then one day Amoruso had an idea: What if Yahoo split into two public companies? One for the core operating business, and another to hold the Yahoo stock. Wouldn’t Yahoo be able to avoid a big, multi-billion dollar tax bill that way? Amoruso called an old professor who specialised in the tax code. He agreed that the idea made sense.
Starboard decided to take on Yahoo, and a half year later, the firm had a huge win.
Amoruso’s departure from Starboard isn’t any kind of devastating blow to the firm. He wasn’t even the most senior analyst on the Yahoo team, we’re told.
But, walking out Starboard’s doors, Amoruso is carrying a little bit of the firm’s recent glory with him.
Starboard declined to comment on this story.
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