Richard McGuire’s Marcato Capital has made two important filings with the SEC in recent days, both of which we’ll cover in this article. Firstly, the fund has filed its 13F for the end of the fourth quarter filing period, disclosing its equity portfolio at the close of that quarter. Secondly, in a 13D filing on Friday, it revealed a letter sent to the board of Sotheby Sothebys (NYSE:BID), which we’ll address first.
Richard (Mick) McGuire founded San Francisco-based Marcato Capital Management in 2010, after previously being a protégé of Bill Ackman’s while working as a partner at Pershing Square. McGuire, still in his late-30’s, is considered a rising star in the industry, having been crowned the Emerging Fund Manager of the Year in 2013 by Institutional Investor. McGuire primarily invests in small and mid-sized businesses in the consumer and financial sectors, with 65% of his equity portfolio devoted to the two at the end of 2014.
Let’s start with the Sothebys (NYSE:BID)’s filing, in which McGuire revealed sending a letter of disgruntled disappointment to Sotheby’s Lead Independent Director, Dominic De Sole, on February 20. That letter referenced Sotheby’s February 13 announcement in which it was stated that “there will be no return of capital to shareholders at this time”.
As McGuire’s letter states, despite multiple attempts to engage the board in ways to increase productivity and shareholder returns through Sothebys (NYSE:BID)’s capital, they have seen little or no returns at all from much of it. McGuire characterized the situation as willful neglect by the Finance Committee of the board and company management. McGuire asserted that the first order of business of the new CEO should be to replace current CFO Patrick McClymont, as well as repurchase $500 million worth of stock.
The latest letter is a continuation in a long-running battle between shareholders and management, which resulted in the ouster of Sothebys (NYSE:BID)’s CEO William Ruprecht late last year, after a six-month proxy fight with Third Point’s Dan Loeb. McGuire was also reportedly offered a board seat at one point, but refused when Sotheby’s did not commit to capital allocation.