Marcato Capital Closing Down As Assets Shrink Over Past Two Years

Mick McGuire’s activist hedge fund Marcato Capital Management is winding down after its assets shrunk over the past two years due to poor returns, sources told Reuters on Sunday.

What Happened

Marcato Capital Management, an activist hedge fund supported by Blackstone Group Inc BX and billionaire William Ackman is shutting down as it has lost a significant number of assets over the past two years.

Richard McGuire, the founder and portfolio manager of the San Francisco-based company, informed investors about his decision to close the activist hedge fund last week, anonymous sources told Reuters. McGuire had been selling positions for the past few months to meet redemption requests.

Why It Matters

Marcato managed roughly $3 billion in assets at its peak years, but assets have recently shrunk to a few hundred million, one of the sources told Reuters. 

In 2013, the hedge fund gained double-digit returns of 26%, pushing for changes at companies like auctions house Sotheby’s.

Marcato’s assets fell from $3.2 billion in 2015 to around $250 million in 2019, due to poor performance and client redemptions, sources told the WSJ earlier this year.

Marcato’s returns shrunk late last year, leaving the fund with a sizable loss for 2018, an investor said to Reuters. Despite a strong start in 2019, it may end the year in the red as the U.S.-China trade war had affected some of its investments, such as in companies like Terex Corporation TEX.