Sometime back on a random lazy afternoon, I got curious and found myself reading about the refrigerants used in air-conditioning systems across East Africa. What I realized was how much of the world’s cooling infrastructure depends on specialty chemicals most people have never heard of, made by companies that rarely make headlines. Solstice Advanced Materials (SOLS) is one of those companies. It makes the refrigerants that keep buildings, vehicles, and data centers cool. It produces nuclear materials used in energy infrastructure. It supplies specialty chemicals for electronics manufacturing and healthcare packaging. A sudden disappearance of such businesses would throw most of the supply chains into chaos. Yet, despite its importance, Wall Street still seems reluctant to hand it a valuation it deserves. On Oct. 20, Starboard Value CEO Jeffrey Smith said exactly that out loud at the 13D Monitor Active-Passive Investor Summit in New York, CNBC reported. Solstice is “stupid cheap,” he noted, and he has the stake to back up the opinion. SOLS is up 34.20% year to date, according to Yahoo Finance, but down roughly 28% from its all-time high of $90.80 reached June 30. What Starboard is seeing in Solstice and why the discount exists Starboard Value is not a fund that takes small positions and sends polite letters. The New York-based activist hedge fund, founded by Smith in 2002, targets companies it believes are poorly managed or undervalued. Then it presses boards and management teams for operational changes — cost cuts, strategic pivots, leadership reshuffles, and sometimes all three. Smith personally became chairman of Darden Restaurants after Starboard orchestrated a complete board replacement. He diagnosed Solstice as undervalued, attributing the discount to the market losing faith in management’s ability to extract full value from the company’s core operations. His prescription? Focus on the refrigerants and nuclear businesses — the high-growth, high-margin segments — and cut approximately $100 million in costs across the company. More Wall Street: Nvidia and Micron are about to lord their successes all over Wall Street Nvidia, Palantir, and Alphabet send waves through Wall Street Wall Street elites will pocket windfall from record $46 billion profits Solstice’s Q2 2026 results, reported July 30, showed net sales of $1.148 billion, up 11% year over year, with adjusted diluted EPS of $0.88, beating estimates of $0.77. Adjusted EBITDA was $290 million, representing a 25.3% margin. Nuclear revenue grew 27%. Electronic materials grew 15%. The fundamentals are not the problem. According to Smith’s argument, the management execution and cost structure are the issue. Solstice kept its response measured, saying, “We will review Starboard’s presentation carefully and look forward to engaging with the firm.” For now, the company appears willing to hear Starboard out rather than push back publicly. The Solstice deal collapse that created the opening To understand why SOLS shares are trading 28% below their June high, we need to look at what happened in July and August. On July 6, Solstice announced a $14.5 billion cash-and-stock deal to acquire specialty chemicals maker Element Solutions, betting the combination would benefit from growing demand tied to data centers and semiconductors. Shareholders on both sides pushed back. A Reuters report shows the deal was canceled on August 27. A failed deal of that size can shake investor confidence, even when the business itself is doing well. For Solstice, the concern was that management may have pushed too far with a major acquisition without fully understanding whether shareholders were on board. Related: AI data centers are facing growing political backlash, data shows That narrative, more than any single financial metric, is what Smith is targeting. He is essentially arguing that the deal failure created an irrational discount on a business that is otherwise executing. I think about the refrigerant supply chain when I consider Solstice’s position here. The demand drivers are structural and genuinely secular: Data centers require cooling, and AI infrastructure is accelerating that need. Nuclear energy’s resurgence is driving demand for Solstice’s nuclear materials. None of those tailwinds disappeared when Element Solutions fell apart. Solstice Advanced Materials makes the refrigerants that keep buildings, vehicles, and data centers cool. bancha singchai / Getty Images The valuation gap Starboard believes the market will eventually close Smith’s “stupid cheap” characterization has a specific mathematical grounding. According to Yahoo Finance data, Solstice’s forward P/E ratio is at 17 times, while the trailing 12-month P/E remains at around 44 times, reflecting the gap between current earnings and forward estimates. For activist investors, that spread between current and forward multiples, combined with identifiable cost-reduction opportunities, is exactly the setup they look for. If Starboard is correct that $100 million in costs can be removed from the picture without damaging the core business, the EPS improvement from that alone would meaningfully compress the forward multiple. Q3 2026 earnings report is scheduled for Nov. 4, according to Solstice. That will be the first significant data point to either support or undercut Starboard’s timing. Smith has established his position. The question now is whether management moves toward his prescription or digs in, and whether the November data gives either side more leverage. 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