Marcato Capital Management Adds to Lear Position

Mick McGuire's activist hedge fund Marcato Capital Management has filed an amended 13D with the SEC regarding their stake in Lear (LEA).

Per the filing, Marcato now owns 7.9% of the company with over 6.4 million shares.  This means they've boosted their notional exposure by 750,000 shares since the end of the third quarter.

The fine print indicates they own call options representing 7.6 million shares at prices ranging from $40 to $90 per share and expiration dates ranging from June 2014 to August 2014.  They've also sold puts representing 7.6 million shares with exercise prices ranging from $40 to $65 and the same expiration dates.

The filing was required due to activity on January 23rd.  You can view the exact details of their recent trades here.

We previously highlighted how Marcato disclosed a Lear stake just slightly over a year ago.

Per Google Finance, Lear is "a tier 1 supplier to the global automotive industry. The Company supplies its products to automotive manufacturers with automotive seat systems and related components, as well as electrical distribution systems and related components. The Company has two segments: seating and electrical power management systems (EPMS). The seating segment includes seat systems and related components, such as seat frames, recliner mechanisms, seat tracks, seat trim covers, headrests and seat foam." 

Marcato Capital Managment & Oskie Capital File 13D on Lear

Mick McGuire's hedge fund firm Marcato Capital Management just filed a 13D with the SEC regarding shares of Lear Corp (LEA).  Per the filing, McGuire's firm now owns 5.2% of the company with 5,034,986 shares (inclusive of common stock and options/swaps, as detailed below).

This was a joint filing along with David Markowitz's and Clive Rowe's hedge fund Oskie Capital, forming a filing 'group'.  Oskie owns 0.4% of Lear shares.

This is a brand new position for McGuire's fund, who are known for their activist investment strategy.  The filing was disclosed due to portfolio activity on February 6th.


Activist Plans

Per the fine print of the filing, the hedge funds have recently discussed the capital allocation practices of the company.  They also plan to nominate director candidates.  The company recently announced that it was accelerating its share repurchase plan and increasing its dividend.  The hedge funds still plan on nominating directors and engaging in discussions with management.


Breakdown of Position

Marcato's position is slightly more complex than just owning equity outright.  They have the right to purchase 2,383,440 shares via call options with strikes ranging from $0 to $55 and exercise dates from March 2013 to February 2015.

They also hold options to sell 1,997,180 shares with strikes ranging from $25 to $40 with exercise dates ranging from March 2013 to February 2015.  Additionally, they've entered into swaps with the number of shares specified in such swaps totaling 618,040.

Oskie also holds options to purchase 200,000 shares via call options with strike prices of $50 and expiration dates ranging from February 2013 to March 2013. You can view the specifics of all these transactions at the bottom of the filing here.


Per Google Finance, Lear is "a tier 1 supplier to the global automotive industry. The Company supplies its products to automotive manufacturers with automotive seat systems and related components, as well as electrical distribution systems and related components. The Company has two segments: seating and electrical power management systems (EPMS). The seating segment includes seat systems and related components, such as seat frames, recliner mechanisms, seat tracks, seat trim covers, headrests and seat foam."

For more on McGuire's hedge fund, we've detailed Marcato Capital Management's portfolio activity here as well as a pitch from McGuire on three of his holdings.

Hedge Fund D.E. Shaw Updates a Position

Hedge fund firm D.E. Shaw & Co recently filed a 13G with the SEC in regards to shares of Lear Corporation (LEA) due to activity on March 11th, 2010. In the filing, we see that they now have a 5.1% ownership stake in LEA with 2,202,816 aggregate shares owned. This share total includes warrants that are exercisable into 421,409 shares and preferred stock convertible into 70,238 shares.

This is an increase in their position because back on December 31st, 2009 they owned 1,310,101 shares. Over the past three months they've gained exposure to 892,715 more shares and as such have increased their position by 68.1%. D.E. Shaw was recently listed as one of the world's largest hedge funds and its founder David Shaw recently appeared on Forbes' billionaire list.

Taken from Google Finance, Lear is "a supplier of automotive seat systems and electrical power management systems with a global foot printing, including 35 countries."

For more research from this multifaceted firm, head to D.E. Shaw's insight on leverage. For more of the latest portfolio maneuvers from prominent investment managers, head to our hedge fund tracking series.