Mick McGuire, Marcato Capital Management is the final famous activist up on the schedule. Mick McGuire is giving a presentation called “Don’t Buy This Recovery”. He is speaking live at the 9th Annual Value Investing Congress.
Mick McGuire is the Founder and MD of Marcato Capital Management. Marcato Capital manages both passive and activist investments across all industries. The hedge fund focuses on opportunities in middle-market public equities. Prior to forming Marcato, Mick was an analyst at Bill Ackman’s Pershing Square Capital Management. McGuire has a long career in private and public investments. He received his MBA from Harvard Business School.
Among the latest activist battles, Marcato holds a 7 percent stake in Sothebys (NYSE:BID). Nelson Peltz’s Trian Capital owns a 3 percent stake, and Dan Loeb’s Third Point has recently announced a 6 percent holding in the company. It will be interesting to see if Mick discusses BID or any other companies where he is trying to implement changes.
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Mick McGuire live coverage
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[2:30pm] Mick McGuire pitching one new idea today:
United Rentals, Inc. (NYSE:URI) – $6 billion market cap, largest equipment rental company in the world. Founded in 1997, it was built as a roll-up in a highly fragmented industry. Made a transformative acquisition of the $2 player in the industry for $4.2 billion in April 2012.
Sees it as a pure play on the North American construction/industrial market.
[2:40pm] Cyclical trends pointing up as equipment rentals track U.S. construction spending. Secular trends could also provide a tailwind as low visibility/uncertain economic recovery are creating a secular shift towards renting versus buying equipment.
[2:48pm] Rental penetration rates steadily increasing since the introduction of the equipment rental industry. Significant operating leverage should provide a boost to earnings power.
Acquisition of #2 player RSC Holdings Inc. (NYSE:RRR) provides synergies around $230-250 million. Next largest player becomes Hertz Global Holdings, Inc. (NYSE:HTZ)’ equipment rental business. RSC acquisition also provides mix shift to higher margin and more stable customers.
[2:53pm] Free cash flow will be used to pay down debt in the near term but returning capital to shareholders will be reviewed at appropriate levels of leverage. Currently trades at 5.6x EV/EBITDA but Marcato sees upside of $96 per share which leads to upside potential of 72% from current levels.