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The Morning Brief: Marcato Goes Active on NCR After Board Rebuff

Richard “Mick” McGuire III’s Marcato Capital Management has changed the status of its 6.5 percent investment in NCR from passive to active. The San Francisco-based activist investment firm, which previously filed a 13G, said in an initial 13D filing that on October 14 it proposed McGuire for nomination to the NCR board of directors. On October 21, after NCR’s negative pre-announcement, Marcato told NCR to “immediately take steps to effectuate” McGuire’s request for board representation. McGuire worked at William Ackman’s Pershing Square Capital Management from 2005 to 2009 before founding Marcato.
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Daniel Loeb’s Third Point told clients that during the recent turmoil and fear in the markets—some it said was warranted, some exaggerated—the New York firm took steps “to mitigate volatility and simultaneously take advantage of the market mayhem.” After initially reducing exposures, it lifted hedges, took on new positions, and re-established investments in companies it had previously exited at much higher prices. “Going forward, we expect that the U.S. will remain the best place to invest, credit opportunities will stay slim, and large-cap opportunities with a constructivist angle will become more promising,” the firm stated in the Oct. 21 report. “Although consensus has shifted to lower growth, slower inflation, modest rates, and continued monetary expansion, we think the markets will resume an overall upward trajectory in the U.S.” Specifically, Third Point heavily boosted its stake in biotechnology giant Amgen, and is now one of the company’s largest shareholders. It also called on the company to separate into two companies, which it calls MatureCo and GrowthCo. “We expect that MatureCo would receive a valuation based on its dividend yield while GrowthCo would be valued, like peers, on a high growth multiple on earnings, reflective of the burgeoning pipeline,” it wrote. Third Point also said it established “a significant position” in eBay in the third quarter. The firm said that with the split of eBay and PayPal, eBay’s capital-return strategy “will be more pronounced and structurally, new eBay would be positioned to buy back roughly a third of its float within two and a half years.” Third Point also reported an investment in Chinese e-commerce giant Alibaba, which recently went public. “Third Point has met with management several times and is confident that Alibaba can generate long-term value in its core markets and compete in new ones, making it a compelling potential multi-year investment,” Third Point said. On the other hand, the firm exited its previous activist position in Sony, adding that it made 20 percent on its investment “despite enduring profit warnings nearly every quarter we were invested, incurring worse news about [its] Electronics [business] than we expected, and suffering from market disappointment at the pace of Japanese macroeconomic reform.”
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Greenlight Capital’s David Einhorn said he is starting to do some buying. The New York investor, who recently informed clients that he is re-opening his funds later this year, told CNBC in an interview Tuesday that in the last few weeks he has “picked up a few things.” He said before then he was frustrated that he was not as long as most people. “Last week and the week before we saw things we liked coming down in value,” he added. He also said his short position in AthenaHealth “is working itself out.” Einhorn still likes major holding Apple. “They are working on pretty much all its cylinders,” he said. And he said Micron Technology’s core story “is intact” and that he likes Greek banks.
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Stifel Nicolaus raised its price target on Apple to $115 from $110 following the company’s strong quarterly earnings report. It also called the company’s 2015 guidance “conservative.” For its part, Credit Suisse maintained its $110 price target and its Neutral rating, adding that it continues to believe that the stock will perform well in the near-term. “However, with only 10% upside, we maintain our Neutral rating,” Credit Suisse added in a note to clients.
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Tiger Global’s venture capital business has made another investment in an emerging market Internet company. The New York firm led a $65 Series C round of financing for Malaysia-based Grab Taxi, according to techcrunch.com. The company which operates in 16 cities in Malaysia, Singapore, Thailand, Vietnam, the Philippines and Indonesia, initially started as an app to book licensed taxis. However, earlier this year, it launched a private car service, GrabCar, in Malaysia, which some liken to Uber.
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Macro Risk Advisors reports that the firm raised $401,000 in its third annual charity day, held on October 14. All net commissions earned from option, stock and ETF trades will be donated to four organizations. The Cancer Research Institute and the Melanoma Research Fund at the Perlmutter Cancer Center at NYU Langone will receive $180,000 each. Big Brothers Big Sisters of New York City and Make-A-Wish Foundation Metro and Western New York will each receive $20,500.

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