The Morning Brief: Marcato Threatens to Replace Board at Deckers

Richard (Mick) McGuire III’s Marcato Capital Management has threatened to launch a proxy fight to replace the entire board of directors of Deckers Outdoor Corporation if it fails to find a buyer for the footwear company. In a letter to the board, the hedge fund, which owns6 percentof the shares, acknowledged the strength of Decker’s UGG brand, but lamented the company “has failed to translate this brand strength into growth in earnings and stockholder value.”

Marcato says this has led to “a total collapse” in shareholder confidence in the board and management. On April 25 the board launched a process “to review a broad range of strategic alternatives.” However, Marcato expressed concern that the process will be headed by the current board and management team. Marcato also criticized Angel Martinez, the chairman and former CEO, for launching a campaign to become mayor of Santa Barbara in the coming November election. Shares of Decker rose 1.2 percent on Tuesday to close at $67.72.

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That was quick. Less than 48 hours after Dan Loeb’s Third Point disclosed a large activist stake inNestle, the chocolate and food giant announced a roughly $20.8 billion share buyback. It will be launched on July 4 and completed by the end of June 2020, according to the announcement. “The company is committed to maintaining its sustainable dividend practice,” it adds in a press release. Shares of Nestle Tuesday declined by 1.6 percent to close at $84.30.

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John Paulson’s Paulson & Co. boosted its stake inValeant Pharmaceuticals International. The struggling hedge fund manager, who recently joined the board of directors of the embattled drug company, reported buying more than 2.7 million shares on May 11 for an average price of nearly $13.71 per share. The firm also sold a total of 287,000 shares for between $12.30 and $13.71 on three separate days: May 9, May 17, and June 8. Paulson now owns 6.3 percent of the total shares outstanding. Shares of Valeant fell 2.5 percent, to close at $16.65.

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The European hedge fund market is losing assets. Total hedge fund capital under management declined from $674 billion to $657 billion over the one-year period ending 2016, according to Preqin. Meanwhile, European hedge funds continue to suffer net investor outflows, which amounted to $35 billion in 2016 and another $9 billion in the first quarter of 2017. These declines took place even as performance strengthened. In the 12-month period ending in May, European hedge funds were up, by 10.28 percent on average, having posted gains in 11 months, according to Preqin.

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Private equity firm White Oak Equity Partners said it acquired a minority interest in ROW Asset Management, a systematic quantitative global macro firm with more than $800 million in assets under management. The terms of the deal were not disclosed. White Oak specializes in acquiring minority interests in hedge funds with less than $2 billion in assets under management. According to a press release, “The transaction and new partnership provides ROW with additional financial flexibility to be more opportunistic as it seeks to grow its capabilities and assets.”