This content is from: Portfolio

The Morning Brief: Marcato Sets Sights on New Target

Richard (Mick) McGuire III’s Marcato Capital Management has identified a new activist target. The San Francisco-based hedge fund firm disclosed on Tuesday that it owns 6.3 percent of LPL Financial Holdings, which operates what the company claims is the largest independent broker-dealer network. Marcato had eight disclosed U.S. equity positions at the end of the second quarter, but not LPL. It has purchased all of its LPL shares since August 17.

In a regulatory filing, the hedge fund used typical boiler-plate language to note that the shares are undervalued and that it may speak with management and/or the board in the future and may take some sort of unspecified action. Stand by for this one. The Marcato International Fund lost 9.10 percent in August and was down 8.23 percent for the year.

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The number of new hedge fund launches slipped in the second quarter, to 252 from 264 in the prior quarter, according to Chicago-based data tracker Hedge Fund Research. However, this is slightly more than the 240 total in the same period last year. Altogether, 516 new funds debuted in the first half, putting 2015 on pace for the fewest number of new funds since 2010.

At the same time, the number of funds that liquidated also fell in the second quarter, to an estimated 200, compared with 217 the prior quarter, according to HFR. However, this is up from 189 in the second quarter of 2014. According to HFR, equity hedge strategies top both the new launches and liquidations list. Among funds of hedge funds, there were 24 liquidations and 10 launches in the second quarter.

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More bad news from Fortress Investment Group’s hedge fund business. Managing directors David Markus and Maggie Arvedlund are leaving the company after the fund they were running, the Partners Fund, is being cut back sharply, according to a Reuters report citing people familiar with the matter. We previously noted that Stuart Bohart resigned as president of Fortress’ hedge fund business after spending five years with the firm, as reported by the Wall Street Journal, while the Fortress Macro Fund is mired in the red after losing money last year.

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William Ackman’s Pershing Square Capital Management bought nearly 38 million shares of Mondelez International on September 18 for a little less than $37 per share under previously disclosed forward purchase contracts. Its stake in the snack food giant remains at 7.5 percent. The shares closed at $42.85 that day, providing the New York investor with an instant profit of nearly 16 percent. Pershing Square disclosed its initial stake in the company in early August.

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SS&C GlobeOp said its Forward Redemption Indicator for September 2015 measured 3.79 percent, up from 3.46 percent in August. “The bulk of the increase was in longer-term planned redemptions, with some concentrated activity among certain funds, so it is too early to say whether this is a change in recent trends which have been relatively stable despite market volatility,” said Bill Stone, chairman and chief executive officer of SS&C Technologies, in a press release. SS&C GlobeOp’s data on the GlobeOp platform represents roughly 10 percent of the hedge fund industry.

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