September 18, 2012
Shares of Office Depot (NYSE: ODP ) are up 8% since activist investment fund Starboard Value LP bought a 13% stake on Monday morning. Starboard CEO Jeffrey Smith believes that shares are "deeply undervalued."
Despite the appearance of a new activist investor, don't expect Office Depot's stock bump to last. Activist investors almost always mean a short-term win for a stock, but long-term success is harder to come by.
Office Depot is behind the curve in many ways, most significantly in terms of online presence. Competition from Amazon.com (NASDAQ: AMZN ) and even Wal-Mart.com (NYSE: WMT ) is a killer for brick-and-mortars that are slow to adapt. Office Depot may be undervalued, but in this case, it's for good reason.
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