The hedge fund manager going after Olive Garden is getting into Macy's

Starboard Value's Jeff Smith recommended Macy's at the CNBC/Institutional Investor's Delivering Alpha Conference at the Pierre Hotel in New York.

This is the first time the activist investor is disclosing the position.

The stock jumped more than 4.8% after Smith announced the position.

Smith pointed out that the retailer's stock currently trades around $66 per share. Smith thinks it's worth in excess of $125 per share.

On the surface, he explained, the stock appears to be "fairly valued." It trades in line with its peers, but it doesn't "tell the whole story." Smith pointed out some of the retailers valuable real estate holdings (trophy properties such as Harold Square and high-end malls). Smith later added they hired a real estate consultancy firm to help them value the properties.

Adjusted for real estate value, shareholders are getting the rest of Macy's for less than 3x EBITDA, he said.

He also added that they have "highly valuable" credit card business.

Smith is also the activist investor in Darden, the parent company of Olive Garden.

During the Q&A, Smith said that he's always ready to get involved as an activist. He noted that he thinks that Macy's is "receptive to looking into this opportunity."