The Morning Brief: Activist Marcato Demands Sotheby’s Share Buyback

Marcato Capital Management’s Richard (Mick) McGuire III is putting more pressure on Sotheby’s. The San Francisco–based activist hedge fund manager on Friday fired off a letter to Domenico De Sole, the auctioneer’s lead independent director, calling on the board to repurchase $500 million of Sotheby’s shares. He also urged the company to find a new chief financial officer once it finishes searching for a new chief executive officer. McGuire said he wrote the letter in response to Sotheby’s announcement on February 13 that it will not return capital to shareholders until it finishes searching for a new chief executive officer.

In response, De Sole said in a statement, “Our immediate priority is selecting a new CEO and determining a strategy to increase shareholder value. We will address capital allocation based on our strategy and the resulting capital needs.” Last year Marcato’s main fund gained 5.3 percent. In the first half of February 2015 alone, through February 13, Marcato had returned 6.90 percent. But it is only up 0.60 for the year so far, according to HSBC, which tracks hedge fund performance.


Nelson Peltz’s Trian Fund Management and The California State Teachers’ Retirement System (CalSTRS) sold more than 2.4 million shares of Ingersoll-Rand between February 12 and February 18, for between roughly 67.50 and $68 per share. As a result, Trian alone now owns 4.93 percent of the shares outstanding. In addition, Trian, a New York–based activist hedge fund firm, said in a regulatory filing that it no longer is part of a group with CalSTRS for filing purposes.


Kenneth Griffin’s Chicago–based Citadel disclosed in an amended 13G filing Friday that it owned nearly 7.5 million shares, or 5.7 percent, of Hovnanian Enterprises as of December 31. In an initial 13G also filed on Friday, Citadel disclosed that it owned 5.2 percent of the home builder as of September 26.

In a separate filing, Citadel said it owned nearly 5.2 million shares, or 5 percent, of Synergy Resources Corporation, an oil and natural gas exploration and production company. This is nearly triple the number of shares the firm reported owning at year-end. Citadel also disclosed that it owned more than 5.76 million shares of Aruba Networks, or 5.3 percent of the networking company. It owned a little more than three million shares at year-end.


New York–based Davidson Kempner Capital Management disclosed that it owns 990,000 shares of FinTech Acquisition Corp., or 6.96 percent of the blank-check company formed for the purpose of acquiring or merging with businesses in the financial technology industry. The date of the disclosure is the same date FinTech priced its initial public offering of 10 million shares at $10 apiece.