Marcato Capital Management Discloses CyrusOne (CONE) Stake ~ market folly

Monday, April 1, 2013

Marcato Capital Management Discloses CyrusOne (CONE) Stake

Mick McGuire's hedge fund firm Marcato Capital Management recently filed a 13G on shares of CyrusOne (CONE) with the SEC.  Per the filing, Marcato has revealed an 11.8% ownership stake in CONE with 2,592,394 shares.  The filing was originally required due to portfolio activity on February 21st.

Per an additional Form 4 filed with the SEC, we see that McGuire's firm was out buying some of their shares on various dates between February 28th and March 12th, at prices ranging from $21.25 up to $22.02 per share.  Cyrus One shares currently trade just below $23.

Interest Stems From Cincinnati Bell Stake

While Marcato Capital Management has disclosed CONE as a new position, it's important to realize that the hedge fund also owns a stake in Cincinnati Bell (CBB).  CONE is a subsidiary of CBB.  CBB completed an initial public offering of 16,500,000 CONE shares back on January 18th.  After the IPO, CBB expected to effectively own 71.6% of CyrusOne.

A few months ago, McGuire pitched CBB at the Great Investors' Best Ideas symposium and highlighted the compelling angle of the CONE spin-off IPO.  And now that CONE is a separately traded entity, Marcato has revealed a sizable stake in it.

Per Google Finance, CyrusOne is "a owner, operator and developer of enterprise-class, carrier-neutral data center properties. The Company provides mission-critical data center facilities that protect operation of information technology (IT) infrastructure for approximately 500 customers. As of September 30, 2012, the Company’s property portfolio included 23 operating data centers in nine markets: Austin; Chicago; Cincinnati; Dallas; Houston; London; San Antonio; Singapore, and South Bend providing approximately 1,630,000 net rentable square feet (NRSF) and powered by approximately 125 megawatts of utility power."

For more from this hedge fund, head to Marcato's recent portfolio activity.

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