At Insider Monkey, we track a little over 500 of the world’s 8,000-plus hedge funds because we choose to focus on the best funds active today. Within this elite group, there are the usual Buffett’s and Einhorn’s you’d expect, but there are also some lesser known–but still equally as skilled–names like Mick McGuire and his hedge fund Marcato Capital.
McGuire founded Marcato Capital Management in 2010, and prior to this, he worked with Bill Ackman and Pershing Square. A Harvard MBA grad, McGuire focuses on small to mid-sized companies in the real estate and consumer goods industries.
What’s Mick McGuire’s next big play?
Mick McGuire will be presenting his latest investment idea at the 9th New York Annual Value Investing Congress, the event CNBC dubbed “The Superbowl of Value Investing.” The event takes place September 16 & 17, 2013 at Jazz at Lincoln Center’s Fredrick P. Rose Hall and some of the world’s most successful investors are slated to attend, including Jeff Ubben and Alex Roepers, to name a few. In addition, this year’s event will feature a special presentation by Tyler and Cameron Winklevoss. The early bird price expires on July 30th – to take advantage of significant savings, including a special Insider Monkey discount, go to www.ValueInvestingCongress.com/InsiderMonkey and use discount code N13IME1.
How has he done lately?
Keeping that in mind, let’s take a look at how some of Mick McGuire and Marcato Capital’s top stock picks have performed since the end of the first quarter, the latest 13F filing we have from the fund. When we rank McGuire’s $750 million equity portfolio by positional value, we can see that the top five stock picks are as follows: Lear Corporation (NYSE:LEA), NCR Corporation (NYSE:NCR), Gencorp Inc (NYSE:GY), Brookfield Residential Properties Inc (NYSE:BRP) and CyrusOne Inc (NASDAQ:CONE).
Since March 31st, 2013, here’s what the returns for this “fab five” shake out to:
Lear Corporation, +22.4%
NCR Corporation, +30.0%
Brookfield Residential Properties, -16.6%
So, for those of you keeping score at home, the S&P 500 returned 8.3% over that same time period, meaning that on average, Mick McGuire and Marcato Capital’s five favorite stock picks beat the market by just under 3% in four and a half months. Obviously, this outperformance is assumed if piggyback investors went long by an equal weight in each of these five stocks, but in reality, McGuire’s conviction in Lear and NCR–he has a combine 61% of his equity portfolio in these two companies–means that the hedge fund manager’s returns were, in essence, better.
Moving forward, Lear Corporation (NYSE:LEA) looks set to continue its appreciative ways with a revenue and earnings beat in its latest quarterly financials, while hardware and electronics company NCR Corporation (NYSE:NCR) has seen a flurry of analyst upgrades in recent weeks, from JPMorgan Cazenove to Oppenheimer.
Gencorp Inc (NYSE:GY) continues to benefit from its purchase of Pratt & Whitney Rocketdyne from United Technologies, forming what is now called Aerojet Rocketdyne, and it’s easy to see that Mick McGuire was playing the acquisition. We’ll be interested to learn if he hangs on for the long run when the next round of 13F filings come out.
Of the five companies, Brookfield Residential Properties Inc (NYSE:BRP) and CyrusOne Inc (NASDAQ:CONE) have tanked since the end of Q1, with Brookfield, a homebuilder, clearly suffering from the recent rise in mortgage rates. CyrusOne, on the other hand, was a spin-off situation from telephone operator Cincinnati Bell, and expectations haven’t been met for the most part. Investors have stayed out of the post-IPO play, and frankly, there’s been too little volume to expect any significant moves any time soon.