Advance Auto Parts Inc.'s stock surged 6.4% in premarket trade Wednesday, after New York hedge fund Starboard Value L.P. said it had acquired a 3.7% ownership stake in the auto parts retailer. In a letter to Advance Auto's Chief Executive Darren Jackson, Starboard Managing Member Jeffrey Smith wrote that the stock could achieve a price of $350, which is more than double Tuesday's closing price of $170.53. "We believe that the current market price of Advance does not fully reflect the value of its businesses and that opportunities exist within the control of management and the board of directors of the Company (the "Board") to create substantial value for all shareholders," Smith wrote. Starboard's 3.7% stake in the company would make it the sixth-largest shareholder, according to FactSet. Advance Auto's stock has gained 7.1% over the past three months through Tuesday, while the S&P 500 had lost 8.7%.
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