Activist investor Jeff Smith sparked a rally in two stocks Thursday — Here's his pitch
(This story is for CNBC Pro subscribers only). Activist investor Jeff Smith pitched two new stocks at a conference on Thursday, sending shares jumping in early trading. The CEO of Starboard Value discussed those new positions in Corteva and ON Semiconductor with CNBC's David Faber on " Squawk on the Street ." Smith did not disclose the size of either stake but said Starboard would be among the biggest shareholders for both companies. The investment in ON Semiconductors puts Starboard back in an industry that it knows well, and the stock surged 11% after Smith made his pitch at the 13D Monitor Active-Passive Investor Summit. The hedge fund manager said that there was an opportunity to cut costs and grow margins at ON. "Their margins are too low, and the reason their margins are too low is because they've been spending I don't know how many of the last however many years doing acquisitions in order to position the company where they want to be positioned in the right end-markets, which again we like," Smith said. "But now they need to turn their attention to rationalizing their manufacturing." The company has already started down that path, Smith said, and a CEO transition made it an attractive entry point for investors. Keith Jackson, the CEO and President of ON, announced on Sept. 4 that he would retired next May. Agriculture company Corteva was created by a spinoff from DuPont in 2019, and Smith said it was poised for growth over the next few years, citing a loyal customer base as one positive for the business. "We think it's a great business. We think it's recession-resistant, highly stable and we actually think there's wind at the back of the company when it comes to revenue for the next several years," Smith said. However, Smith said that the company has failed to achieve the cost synergies promised during the spin-off, creating an opportunity for an activist investor. "Instead of focusing on nominal dollar savings, because it gets muddy ... you need margin improvement. You need it to drop to the bottom line," Smith said. Shares of Corteva jumped 5.9% on Thursday after Smith's announcement. The investments are friendly so far, but Smith said Starboard was prepared to challenge for board seats if the companies don't execute like the fund expects. Watch the full interview above.

Jeff Smith, chief executive officer and chief investment officer of Starboard Value LP. Chris Goodney | Bloomberg | Getty Images