Hedge Funds’ Make Moves On Newly-Public Biotech And “Undervalued” Broker

We will now provide a quick introduction to the other investment firm discussed in this article. Marcato Capital Management is a San Francisco-based activist hedge fund established in October 2010. The investment firm takes a fundamental-based approach to investing and primarily seeks opportunities in middle-market public stocks. As stated by its latest 13F filing with the SEC, Marcato Capital Management oversees a public equity portfolio with a market value of $2.39 billion.

Let’s now move on to Marcato Capital Management’s latest activist target, LPL Financial Holdings Inc (NASDAQ:LPLA), one of the largest independent broker dealers in the United States. The freshly-disclosed 13D filing indicates the hedge fund’s conviction that the shares of LPL are undervalued and represent an attractive investment opportunity. At the same time, the public filing also states that the investment firm may also engage in discussions with the company on possible value-enhancing opportunities, which could include improving capital structure or allocation, mergers and acquisitions, or asset allocation, among other things.

Let us remind you that LPL Financial Holdings was under regulatory examination last year and was fined $10 million by the Financial Industry Regulatory Authority for broad supervisory failures. Besides that, the company was forced to pay an additional $1.7 million in restitution to several customers who acquired non-traditional ETFs. To minimize the risks associated with regulatory investigations, the company recently named Emily Gordy to the post of Executive Vice President, Deputy General Counsel. Hence, she is set to monitor the Regulatory Inquiries and Investigations group within the company’s Legal Department, and will primarily be focused on working with regulators to tackle various regulatory matters. John H. Scully’s SPO Advisory Corp, the second-largest shareholder of LPL Financial Holdings Inc (NASDAQ:LPLA) within our database, boosted its stake in the company to 8.77 million shares during the second quarter.

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