The activist fund takes a stake in an underperforming cloud services firm.

Starboard Value has purchased a 7.5% stake in the cloud storage company Box Inc.

The activist hedge fund called the cloud services giant “undervalued.” Jeffrey Smith’s firm is now the second-largest shareholder after Vanguard Group. Box stock was off 40% in 2019 prior to the announcement. On Wednesday, BOX shares popped 12.15%.

It is unclear what the hedge fund plans to do with its stake. The fund may seek a board seat. It could push the firm to consider strategic alternatives. However, it appears that Box wasn’t caught off guard by the investment.

“While we do not comment on interactions with our investors, Box is committed to maintaining an active and engaged dialogue with stockholders,” a Box spokesperson said in a statement. “The Board of Directors and management team are focused on delivering growth and profitability to drive long-term stockholder value as we continue to pioneer the Cloud Content Management market.”

Starboard Value Stays Active

Starboard has a history of shaking things up at organizations. Its most recent successes at the board level came from its stake in Yahoo! and security giant Symantec. Both firms assigned board seats to  Starboard candidates. Under pressure, Yahoo! later sold itself to Verizon Communications.

Starboard most recently took a large stake in Papa John’s International. The fund’s founder Jeffrey Smith currently services as the pizza company’s chairman. Papa John’s just appointed a new CEO under the guidance of the activist fund.

Did Box Executives Expose Themselves to a Coup?

Finally, the potential showdown between Box executives and Starboard comes not long after the cloud firm changed its voting structure. Last year, the firm converted its Class B shares to Class A shares. Prior to the conversion, Class B shares had 10 times the voting power of the alternative. At the time, CEO Aaron Levie and insiders controlled 98.8% of the company.

Leaders at firms like Alphabet and Facebook have used a dual-class structure to maintain control of the organization. However, several institutional investors have argued that firms wishing to go public should expose themselves to the whims of activists in order to bolster accountability.