| Richard (Mick) McGuire III (Bloomberg) |
Richard (Mick) McGuire III’s Marcato Capital Management is the latest activist hedge fund firm to be passing the hat.
The San Francisco–based hedge fund manager and William Ackman protégé is looking to raise money for three new funds at Marcato, which he founded in 2010 after working at Ackman’s Pershing Square Capital Management, where he was a partner from 2005 to 2009. While at Pershing Square, McGuire served as the nonexecutive chairman of Borders Group from January 2009 to May 2010. In 2011, Borders filed for bankruptcy and liquidated.
The three new funds are called Marcato Encore, LP; Marcato Encore International, Ltd.; and Marcato Encore II, LP. It is possible they are all related to the same fund, with one master fund structure. The minimum investment for each of the funds is just $100,000, according to regulatory filings. McGuire did not respond to several requests to comment.
Through May, Marcato International, Ltd., was up 7 percent after gaining more than 3 percent that month. It gained 5.3 percent last year, 26 percent in 2013 and nearly 29 percent in 2012.
At the end of the first quarter, Marcato had $2.7 billion in U.S. equity assets concentrated in eight individual stocks.
Marcato has been involved in several high-profile activist battles over the past year. Earlier this year, Life Time Fitness agreed to be taken private by Leonard Green & Partners and TPG in a buyout deal worth more than $4 billion. Marcato began buying shares of the high-end fitness club chain in early 2014 and in September urged the company to spin off its real estate into a real estate investment trust.
McGuire also has been a longtime investor in Sotheby’s and is locked in a legal battle with the auctioneer in a bid to force it to publicly disclose certain documents from earlier legal proceedings involving another activist hedge fund firm, Daniel Loeb’s New York–based Third Point.
Marcato is also engaged in an activist campaign with BNY Mellon, by far its largest holding. Earlier this year it published a 153-slide presentation and a letter calling for the ouster of the banking giant’s chief executive officer and laying out a comprehensive restructuring plan.
McGuire should not have trouble raising money for his new funds, as investors have been pouring money into activists for the past few years. For example, Ackman’s Pershing Square started the year with $19 billion, up from $12.1 billion the previous year. Of course, performance played a big role, as Ackman’s funds were up about 50 percent gross last year. In addition, Pershing Square Holdings, a publicly traded investment vehicle launched on December 31, 2012, raised $2.8 billion when the shares were listed in an October 2014 IPO.
Jeffrey Ubben’s San Francisco–based ValueAct Capital now manages more than $18 billion. This is double what it had just two years ago.
At the SkyBridge Alternatives (SALT) Conference in May, Jeffrey Smith said his New York–based Starboard Value manages $4 billion and is still accepting money. This is roughly double what he managed a year earlier. In fact, the firm’s first-quarter 13F filing reported that Starboard Value had $4.8 billion in U.S. equity investments.
Meanwhile, Keith Meister’s New York–based Corvex Management, which was launched in late 2010, started this year with $7.3 billion.
