Richard McGuire’s Marcato Capital Management has gone activist on NCR Corporation (NYSE:NCR). According to a Schedule 13D form filed with the SEC today, the fund disclosed ownership of 10.85 million shares of Common Stock (same as it did by the end of the second quarter of the year), which account for 6.5% of the company’s shares outstanding. In addition, Marcato stated that, in light of the company’s negative pre-announcement of third quarter 2014 earnings, and lowering of full-year 2014 guidance, Mr. McGuire should be immediately nominated to serve as a Director in NCR’s Board.
Marcato Capital Management is a San Francisco-based employee owned hedge fund sponsor, founded by Richard McGuire in 2010. Mr. McGuire has an MBA from Harvard University, and prior to opening his own firm, he worked at Bill Ackman’s Pershing Square. Marcato Capital invests in value stocks of small and mid-size companies mainly.
NCR Corporation (NYSE:NCR) is a $4.1 billion market cap technology company that provides products and services that enable businesses to connect, interact and transact with their customers and enhance their customer relationships. Yesterday, the company announced preliminary third quarter 2014 results and provided an update to its outlook for the full-year 2014. For the third quarter, the management expects revenue of $1.647 billion, or year-over-year revenue growth of 9%, and non-GAAP diluted earnings per share of approximately $0.67, below its previous expectations, mainly “due to lower operating results and unfavorable foreign currency impacts, partially offset by a lower effective income tax rate” (BusinessWire).
According to Marcato’s latest SEC filing, “the shares, when purchased, were undervalued and represented an attractive investment opportunity” (SEC). However, following the poor earnings and guidance pre-announced recently, the company might now need to “review options for enhancing shareholder value through various strategic alternatives or operational or management initiatives including, but not limited to, improving capital structure and/or capital allocation, strategic transactions, and general corporate strategies.”
I should highlight two more things in relation to NCR Corporation (NYSE:NCR). First off, that this is Marcato Capital Management’s largest equity position (according to its last 13F filing); secondly, that Marcato is the largest institutional shareholder (amongst those we track) in the company. Other major funds betting on NCR Corporation (NYSE:NCR) are Anthony Bozza’s Lakewood Capital Management, David Cohen and Harold Levy’s Iridian Asset Management, and Ken Fisher’s Fisher Asset Management, all of which disclosed ownership of more than 2.9 million shares (each) by the end of the second quarter of 2014. Young hedge fund billionaires David Einhorn and Dan Loeb sold out of the stock earlier this year.
Disclosure: Javier Hasse holds no positions in any stocks or funds mentioned
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