Office Depot: Value Play or Value Trap?
Shares of Office Depot 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 and even Wal-Mart.com 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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The article Office Depot: Value Play or Value Trap? originally appeared on Fool.com.Chris Hill, Jason Moser, and Joe Magyer own shares of Amazon.com. The Motley Fool owns shares of Amazon.com and Staples. Motley Fool newsletter services recommend Amazon.com and Staples. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.