Starboard Value reduced its Dominion Energy stake by approximately one-third during the fourth quarter, regulatory filings show, after the Virginia-based utility climbed 22% through the period. The activist fund now holds roughly 4.1 million shares valued at $230 million, down from 6.2 million shares worth $310 million at September's quarter-end. Dominion closed Friday at $56.12, within 3% of its twelve-month high.
Starboard first disclosed the Dominion position in mid-2023 when the stock traded near $48, arguing the company's regulated transmission and distribution assets were undervalued relative to peer utilities and that management had overcorrected following the cancelled Atlantic Coast Pipeline. The fund pushed for capital discipline, balance-sheet optimization, and clearer communication around data-center interconnection demand in Northern Virginia. Dominion's shares gained 18% in 2024, outpacing the Utilities Select Sector SPDR's 12% return, as management accelerated $43 billion in grid-investment plans through 2029 and signed three hyperscale data-center power agreements totaling 1.8 gigawatts of incremental load.
The partial exit suggests Starboard captured its thesis on regulated-asset revaluation and redeployed capital rather than pressing for structural change. Dominion's forward price-to-earnings multiple expanded from 14.2x in early 2023 to 18.6x today, in line with Southern Company and Duke Energy, erasing the valuation discount Starboard identified. The utility now trades at a 4.2% dividend yield with analyst consensus modeling 6-7% annual earnings growth through 2027, driven by regulated rate-base expansion rather than merchant-generation upside. Starboard's remaining $230 million position represents roughly 0.9% of Dominion's $47 billion market capitalization, below the 2-3% stake threshold typically associated with active engagement.
The timing reflects broader activist rotation within the utility sector. Elliott Management exited FirstEnergy completely in Q3 after a 19% gain, while Inclusive Capital reduced its NextEra Energy position by 40% following renewable-development slowdowns. Activists extracted $18 billion in shareholder returns from utilities over the past eighteen months through buybacks, dividend increases, and asset sales, according to Lazard's activism review. Dominion itself bought back $1.1 billion in stock during 2024, its first repurchase program since 2018, and raised its quarterly dividend 5.4% to $0.7075 per share.
Allocators should track Dominion's March investor day, where management will detail five-year capital allocation and provide updated load-growth forecasts for its Virginia and Carolina service territories. The company has $8.3 billion in pending rate cases across three jurisdictions, with decisions expected between April and July that will set allowed returns on equity for $23 billion in transmission and distribution investments. Watch whether Starboard's exit prompts other long-only holders to trim positions after the multiple expansion, or whether data-center power demand sustains premium valuations for utilities with available grid capacity.
Dominion reports fourth-quarter earnings February 14th. Consensus expects $1.09 per share, implying full-year 2024 earnings of $3.18, up 7% year-over-year.