Marcato International, an activist hedge fund that mainly bets on U.S. equities, returned 10.4% in July, handily beating the broader stock market index’s gain, when the fund made two new investments.
July’s gain helped shrink the fund’s losses for the year, leaving it down 2.7% through the end of July, according to a shareholder update sent to investors in the $1.5 billion fund firm and seen by Reuters on Tuesday. The Standard & Poor’s 500 index climbed 3.7% in July and is up 7.7% for the year.
Marcato last week said that it now owns 5.1% stakes in crane and heavy equipment manufacturer Terex Corp. (TEX) and restaurant chain Buffalo Wild Wings (BWLD) sending the share price of both companies higher. Neither company has big name hedge fund investors among its biggest owners, leaving the door open for Marcato to become the driving force in pushing management to use its capital better and buy more of its own shares.
At the same time, Marcato’s three biggest holdings—Bank of New York Mellon (BK) , Goodyear Tire & Rubber (GT) and auction house Sotheby’s (BID)—also performed well with Sotheby’s climbing 18 percent. Last week, Taikang Life Insurance, run by Chen Dongsheng, who founded Chinese auction house China Guardian, took a 13.5% stake in Sotheby’s.
Marcato is run by Mick McGuire who had been a partner in Bill Ackman’s Pershing Square Capital Management before launching his firm six years ago. The fund has returned an average 9% a year since its launch.
