Marcato Capital Management Acquires 5.1% of Terex

Jul 28 2016 | 11:58pm ET

Mick McGuire’s activist hedge fund Marcato Capital Management has disclosed its second investment in less than a week on Thursday, revealing a 5.1% stake in construction crane maker Terex.

The hedge fund disclosed the position in a regulatory filing. In it, Marcato said it believes Terex stock to be undervalued at current levels and that it has already held discussions with management about enhancing shareholder value through strategic alternatives or operational initiatives. No specific suggestions were included in the filing. 

The move comes just days after Marcato revealed a similar stake in restaurant chain Buffalo Wild Wings. Unlike the reaction to that announcement, Terex shares moved only marginally upwards on news of Marcato’s involvement, gaining less than 2% on the day.

Terex, which specializes in large tower cranes, has been engaged in a long series of discussions to merge or sell the company, including a deal with a Chinese company that fell through in May.

The majority of Marcato’s position in Terex was acquired through in-the-money call options, according to the Wall Street Journal. The options give Marcato the right to buy 5.5 million shares of Terex stock at $14 per share by late December of next year. Terex closed on Thursday at $23.55.

San Francisco-based Marcato was founded in 2010 by McGuire, who formerly worked as a partner at Bill Ackman’s Pershing Square Capital Management. The company manages approximately $1.5 billion, according to Reuters, and has returned an average 9% annually over its lifetime.

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