Activist hedge fund Starboard Value is calling on Salesforce to capitalise on its market-leading position and increase margins, having acquired a significant stake in the cloud software specialist, according to a report by the Financial Times.

Shares of Salesforce have slumped by around 40% so far in 2022 – double the drop seen by rival from Oracle over the same period – on the back of what Starboard attributes to be a “subpar mix of growth and profitability”.

Salesforce shares closed up more than 4% on Tuesday when news of Starboard's stake broke.

The $8.4 billion New York-based fund, which is led by Jeff Smith, outlined its position in a presentation published on Tuesday, without making any specific recommendations, a common tactic employed by activist funds that buy small stakes and then seek to change management or force a sale or acquisition.

According to an unnamed source, San Francisco-based Salesforce is actively scouting for merger and acquisition opportunities and making organic investments to grow its cloud computing platform.