The activist fund managed about $3 billion at peak powers

Marcato Capital Partners will shut down after two years of lackluster returns.

Multiple media outlets reported the developments on Sunday. According to such reports, Marcato founder and PM Richard McGuire started telling his investors of plans to shut the fund last week. Given that the portfolio is currently holding a lot of cash, McGuire plans to return the money quickly, the report indicates. The firm has faced a series of redemption requests over the last few months.

Marcato Capital Partners Struggles in 2019

Marcato Capital had one of the most enthusiastic launches of the decade back in 2010. The world’s largest hedge fund investor, Blackstone Group, and activist hedge fund manager Bill Ackman, both backed the firm. McGuire had previously worked for Ackman at Pershing Square Capital Management and was the first partner to leave the firm.

At its peak, McGuire’s firm managed about $3 billion. However, that figure has fallen to several hundred million. Problems began in 2018 around the start of the U.S.-China trade war. Although the firm averaged 10.7% returns from inception to about September 2018, according to CNBC, the fund started taking hits from companies with exposure to the trade battle. That scenario included a sizable loss on Terex.

McGuire will continue to manage his own capital. He could partner with another fund in the future.

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