Relational Investors Discloses "Confidential" 5.1M Share Stake in Analog Devices (ADI)

In an amended 12/31/06 13F filing, activist investors Relational Investors disclosed a 5.1 million shares stake in Analog Devices Inc. (NYSE: ADI). The firm requested confidential treatment of the position and it was not disclosed with the firm's original 12/31/06 13F which was released on 02/14/07.

Relational maintained its 5.1 million share stake in ADI from 12/31/06 to 03/31/07, according to its new 13F.

In the firm's new 13F for the quarter ended 03/31/07 , Relational Investors also disclosed a new 14.2 million share stake in Sprint-Nextel (NYSE: S) (WSJ report in April noted the position). The firm also closed out its stake in Ceridian (NYSE: CEN).

Relational Investors is best known for its push to remove Home Depot's (NYSE: HD) CEO Bob Nardelli.

Whitworth's Relational Investors Now Targeting Sprint-Nextel (S)

According to reports from the Wall Street Journal, activist investor Relational Investors has built a stake of about $500 million, or nearly 1%, in Sprint-Nextel (NYSE: S).

The paper said Relational Investors' Ralph Whitworth has been calling for a number of changes at the company, including a pullback in its capital spending and a potential sale of its fiber-optic networking and long-distance operation.

On Tuesday, Relational Investors said they sold their remaining shares in Ceridian Corp. (NYSE: CEN), with Whitworth saying the firm has "bigger fish to fry."

Relational Investors was recently successful in its push to remove Home Depot (NYSE: HD) CEO Bob Nardelli and to split off the HD Supply business. Relational Investors was also provided a seat on Home Depot's board.

Past reports on Relational Investors

Reports Relational Investors Sold Remaining Stake in Ceridian (CEN)

According to reports from Reuters, activist fund Relational Investors said they sold their remaining shares in Ceridian Corp. (NYSE: CEN). According to the report, Relational Investors' principal Ralph Whitworth said the firm has "bigger fish to fry."

Ceridian is also an activist target of Bill Ackman's Pershing Square Capital, which wants the company to spin-off its Comdata division and is seeking to replace the board.

In a letter to Ceridian's Chairman earlier in the year, Relational Investors said they would support each of the points made by Pershing Square. In the same letter, Relational Investors noted they decided to begin selling their position having experienced many of the same frustrations expressed by Pershing Square.

In February, Ceridian announced that its Board of Directors has decided to explore a broad range of strategic alternatives to enhance shareholder value.

Relational Investors' Batchelder Joins Home Depot's (HD) Board

Activist fund Relational Investors scores a board seat in its fight with Home Depot. Will it help the stock?

Late Monday, The Home Depot (NYSE: HD) and Relational Investors LLC announced they reached an agreement on corporate governance matters. As part of the agreement, David H. Batchelder, a principal of Relational, will join The Home Depot board of directors on February 22, 2007, and Relational has agreed to drop its proxy contest.

Batchelder also will be appointed to the Leadership Development and Compensation Committee and to the Audit Committee.

Link to past reports on Home Depot and Relational Investors

Activists Getting Respect and Results - NYT

The New York Times has a interesting article on how activist investors are getting respect and getting results. Link

The articles discusses this week's firing of Home Depot CEO Bob Nardelli, the fruits of Ralph Whitworth of Relational Investors who was ruffling feathers at the company. The article has interesting background on Whitworth, saying his fund, "oversees about $7 billion, all invested in only nine companies that are chosen with an eye toward activist intervention." The fund has averaged a return of 25% over the last nine year.

There is an interesting quote in the article from James V. Pickett, chairman of Wendy’s, which was itself the target of activism from Pershing Square Capital and Nelson Peltz back in 2005. He said, "Most of the issues the activists raised at Wendy’s were things we were already dealing with. They just increased the intensity. But when they own that much of the company, you have to listen to them even if you don’t want to.”

Recent Notes on Relational Investors

Relational Investors' Whitworth Comments on Home Depot's (HD) Nardelli News

Today's big news is the "resignation" of Bob Nardelli from Home Depot. Relational Investors, LLC Ralph Whitworth gave an interview on CNBC about its stance on the news. Relational recently sent a letter to Home Depot recently requesting changes, which the company disclosed in December. Link

On CNBC, commenting on today's news that Home Depot (NYSE: HD) CEO Bob Nardelli has left, Ralph Whitworth of Relational Investors, LLC, a firm that has been pushing for changes at the home improvement giant, said the news paves the way for strategic changes at the company. Whitworth said the stock is 50% undervalued and said his firm will continue their efforts.

Whitworth said the big questions is what Home Depot is going to do with their enormous cash flow. He said if the company continues on the same path they will continue to pressure the company. Whitworth wants the company to stop spending money on the supply business and instead use the money to buyback stock. He said the company is unlevered and can take on 20%-30% leverage, which they can also use for buybacks.

Whitworth said he was not completely surprised the company changed its support for Nardelli.

Whitworth said his firm has not yet met with the company, but plans to in next few weeks. He said the company needs fresh blood on the board, and said his firm intends to push to nominate their representatives.

NOTE: We will publish the link to the CNBC video when it is updated at CNBC.com

Relational Investors Submits Proposal for Changes at Home Depot (HD)

In a recent letter sent to Home Depot Inc. (NYSE: HD), disclosed by the company today, 0.64% holder Relational Investors LLC submitted a shareholder proposal to be considered at the company's 2007 Annual Meeting.

In the proposal, Relational Investors requested that the Board of Directors form a committee comprised exclusively of independent directors to evaluate the strategic direction of the Company and the performance of management, with duties to include studying strategic alternatives for the Company, including a major operational restructuring and/or recapitalization, a partial or complete sale or buyout of the Company, and/or a major recomposition of the executive team.

Relational Investors said it is submitting the Proposal because it believes there is opportunity for substantial appreciation in the value of the stock if the proposed changes are made.

In response to the proposal, Home Depot said it will oppose the formation of the committee but will accommodate a meeting with the firm to be arranged shortly after the first of the year.

Home Depot Proxy

Home Depot Press Release

Large Sovereign Bancorp (SOV) Holder Relational Investors Said There's No Deal with Banco Santander on Sale

In an amended 13D filing on Sovereign Bancorp Inc. (NYSE: SOV) after the close, 6.7% holder Relational Investors disclosed a letter sent to Citigroup Michael Diana refuting speculation of a deal between Relational Investors and Banco Santander (NYSE: STD) on a sale of the company.

The firm said, "In your November 29 report on Sovereign Bancorp, you wrote, among other things, that “we believe that an informal agreement has been reached [between Relational Investors and Banco Santander] for an intermediate term sale.” We wish to state for the record that Relational Investors has no agreement, informal or otherwise, with Banco Santander with respect to the potential sale of Sovereign Bancorp. Nor, contrary to the assertion on page three of your report, have we established with Santander "an informal, mutually agreeable framework" for the sale of Sovereign."