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Investing.com– Shares of rose in extended trading on Monday after a report by The Wall Street Journal said activist investor Starboard Value has taken a significant stake in the company.
Citing a draft letter, the WSJ reported that Starboard is now among Dynatrace’s top five shareholders and has been privately engaging with management in recent months, pushing for changes to boost the stock’s performance.
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Dynatrace shares rose nearly 5% to $37.37 in post-market trading.
The activist believes Dynatrace, which provides AI-powered observability software used to monitor and automate enterprise systems, is well-positioned to benefit from the broader adoption of AI, but has lagged peers in software infrastructure and cybersecurity.
According to the report, Starboard argued the company’s shares trade at a discount due to slowing revenue growth and investor skepticism over near-term improvement prospects.
The hedge fund is urging Dynatrace to expand margins, particularly by cutting sales and marketing expenses, and to accelerate capital returns. While the company recently approved a $1 billion buyback plan, Starboard believes it could return more than $2.5 billion to shareholders over the next three years, the WSJ said.
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