Marcato Capital Increases Avis Budget Stake ~ market folly

Monday, July 20, 2015

Marcato Capital Increases Avis Budget Stake

Mick McGuire's activist investment firm Marcato Capital Management has filed a 13G regarding shares of Avis Budget (CAR).  Per the filing, Marcato now owns 5.4% of the company with over 5.71 million shares.

This is up from the 3.34 million shares that Marcato owned at the end of the first quarter.  The filing was made due to activity on July 9th.  CAR traded at $65 to start the year, but has since slowly declined down to current levels of around $42 and Marcato has used the weakness to boost its exposure to the name.

The thesis here has largely been based on the industry consolidating down from a lot of companies into a few major ones, creating an oligopoly.  The thought is that they could act rationally together, raise prices, and profit.  Thus far, that road has been a little bumpier than expected for bulls.

While Marcato primarily takes activist stakes in companies, this looks to be a passive investment, at least for now.  Prior to founding Marcato, McGuire worked at Bill Ackman's Pershing Square.

We've highlighted previous Marcato portfolio activity here.

Per Google Finance, Avis Budget is "a provider of vehicle rental and car sharing services. The Company operates three brands, which include Avis, Budget and Zipcar. Avis is a rental car supplier and Budget is a rental vehicle supplier. The Company also own Payless, a car rental brand and Apex, which is a car rental brand in New Zealand and Australia. The Company operates in three segments: North America, International and Truck Rental. North America segment provides car rentals in the United States and vehicle rentals in Canada, as well as ancillary products and services. International segment provides and licenses the Company’s brands to third parties for vehicle rentals and ancillary products in Europe, the Middle East, Africa, Asia, South America, Central America, the Caribbean, Australia and New Zealand. Truck Rental segment provides truck rentals and ancillary products and services to consumers and commercial users in the United States.."

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