Pershing Square Capital Management veteran Richard McGuire is planning a small- and mid-cap equity hedge fund, and has won the backing of the Blackstone Group for it.
McGuire, who left Pershing Square last year, has founded Marcato Capital Management is San Francisco. The new firm will invest in companies with reliable cash flows, such as those in the real estate and consumer goods industries, Bloomberg News reports, similar to the strategy run by William Ackman at Pershing Square.
"There are a lot of companies in the small- and middle-market that go under-analyzed and under-appreciated," McGuire said.
Marcato is backed by the Blackstone Strategic Alliance Fund, although McGuire did not disclose the terms of his agreement with the fund. He also declined to say how much the Marcato fund would launch with, although he did say that it might make common cause with Pershing Square on some investments.
In a letter to investors last month, Ackman credited McGuire with persuading him to invest in restaurant chain Landry's Restaurants, and said that he and Pershing Square "look forward to the opportunity for future partnerships in situations where our involvement can enhance our respective returns."
McGuire worked at Pershing Square for four years, beginning in 2005.
Blackstone's backing of Marcato follows news of its investment in a commodities hedge fund founded by former Credit Suisse proprietary trader George Taylor.