Second Hedge Fund Pushes For Change At Sotheby's

Oct 24 2013 | 1:05pm ET

While Third Point demands the ouster of Sotheby's CEO, another activist hedge fund is calling on the auction house to improve its share price by selling that house.

Marcato Capital Management, which owns a 6.6% stake in Sotheby's, is pushing the company to sell its properties in New York and London, The Wall Street Journal reports. Unlike Third Point, which has taken its fight public, Marcato is working behind the scenes, presenting its plan to investors yesterday evening in San Francisco.

The New York-based hedge fund met with Sotheby's in August. In addition to selling its homes, the firm wants Sotheby's to free up the capital it uses in its smaller business, art financing and art dealing.

"Sotheby's is committed to healthy two-way communication with its investors and welcomes thoughtful suggestions as we pursue our common goal of a strong, growing, competitive Sotheby's open to new opportunities," a spokesman told the Journal.

Those words are a marked contrast to Sotheby's reaction to Third Point's proposals, which was to adopt a poison pill provision. Third Point's Daniel Loeb has decried Sotheby's "lack of leadership" and called on CEO William Ruprecht to resign, while denouncing "chronically weak operating margins" and "dysfunctional division and a fractured culture."

Marcato's Mick McGuire is said to agree with Loeb that Sotheby's needs to make changes to improve returns and return capital to shareholders. The two hedge funds are not working together, however.

Sotheby's has moved to list its Upper East Side home, hiring Eastdil Secured to market it.


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