Marcato makes second investment in a week with Terex stake

By Svea Herbst-Bayliss

BOSTON (Reuters) - Activist hedge fund Marcato Capital Management announced its second big investment in a week on Thursday, saying it snapped up a 5.1 percent stake in crane and heavy equipment manufacturer Terex Corp (TEX.N).

Terex's stock price climbed 2.16 percent after the San Francisco-based hedge fund said in a regulatory filing that it now owns 5.5 million Terex shares. It called the stock undervalued and said it plans to talk to management about ways in which to perform better.

Earlier this year, the $2.6 billion Westport, Connecticut-based company said it would sell its material handling and port solutions business to Finnish company Konecranes (KCR1V.HE), suggesting that it is already willing to dispose of businesses that are not earning attractive returns.

Since January, its share price has climbed 28 percent and analysts expect the company may say more about other possible sales when it reports earnings early next week.

By selling off some businesses, Terex could line its coffers to buy back shares, something many activist investors have pushed for in recent years.

Marcato already owns a stake in equipment rental company United Rentals Inc (URI.N), one of Terex's largest customers, and its foray deeper into the industrials sector now comes only a few months it hired Matt Hepler. Hepler specialized in industrials while working for famed activist investor Ralph Whitworth's Relational Investors. Most recently Hepler worked for Red Mountain.

On Monday, Marcato Capital Management announced a 5.1 percent stake in the Buffalo Wild Wings Inc (BWLD.O) restaurant chain, helping to send the stock price up some 17 percent this week.

Marcato's founder, Mick McGuire, who had previously worked as a partner at William Ackman's Pershing Square Capital Management, traditionally urges companies where he invests to allocate capital more wisely.

Buffalo Wild Wings has its analyst day scheduled for Aug. 16 when some analysts expect the chief executive to announce more aggressive buybacks and possibly a shift to having more of its restaurants run by franchisees.

For Marcato, which oversees roughly $1.5 billion in assets, the two investments in companies that have not been very popular with hedge funds could go a long way to helping wipe away this year's losses. Through the middle of July, Marcato was off roughly 10 percent for the year but it has returned an average 9 percent a year over its six-year lifetime.

(Reporting by Svea Herbst-Bayliss; Editing by Tom Brown)