(Best Markets Reports) Activist hedge fund Marcato Capital Management, supported by Blackstone Group and billionaire William Ackman, is closing as assets have shrunk after two years of inadequate incomes, sources said Sunday.
Founder and portfolio manager, Richard McGuire, started telling traders of his decision to give back outside funds late last week and expects to send the funds back rapidly since the portfolio is heavily in cash, the sources stated on condition of anonymity.
McGuire had been promoting positions over the last months to meet redemption requests.
A spokesperson for Marcato refused to respond on Sunday.
The decision underscores the conclusion of a nine-year run for one of the hedge fund business’s most celebrated newcomers who started in 2010 with the support of Blackstone, the world’s biggest hedge fund investor, and Ackman, his previous boss at Pershing Square Capital Management.
McGuire was the primary, former companion to leave Ackman, followed by Scott Ferguson, Roy Katzovicz, and Paul Hilal, who’ve all set up their corporations.
McGuire over the years pressed firms starting from DineEquity, now Dine Brands Global, which operates Applebees, a fast-food restaurant, Bank of New York Mellon, auction house Sotheby’s, to footwear firm Deckers Outdoor Corp for modifications and won a fiercely fought proxy contest at Buffalo Wild Wings.
At its peak, Marcato managed around $3 billion in assets; however, assets have now shrunk to a few hundred million, one of the sources stated.
Returns tumbled in late 2018, leaving the fund with a sizable loss, an investor said. This year, whereas strong at the start, will also settle within the red after a few of the firm’s investments that are weak to the effects of the U.S.-China trade conflict, like Terex Corp, took a hit.
