Mick McGuire's Marcato Capital Management Files 13D on Syms, Now Trinity Place Holdings

Mick McGuire's hedge fund firm Marcato Capital Management just filed a 13D with the SEC regarding the former Syms entity, now known as Trinity Place Holdings (TPHS).  Per the filing, Marcato has disclosed a 27.9% ownership stake in TPHS with 4,645,287 shares.


Syms Chapter 11

Retailer Syms Corp (SYMSQ) recently emerged from Chapter 11 as Trinity Place Holdings.  Per the 10-month bankruptcy, the company closed its retail stores (including Filene's Basement), liquidated inventories and redeemed all stock owned by Marcy Syms.

The funds needed to exit bankruptcy were supplied via the sale of $25 million worth of new common stock.  Marcato took part along with DS Advisors, and Esopus Creek Value Fund.

Trinity Place now emerges with commercial real estate and intellectual property.  Shares still trade over the counter, but now with a new symbol TPHS.

At present, the fine print of the 13D says that Marcato does not have any plans or proposals.  The filing also notes that Mark Ettenger (a consultant of Marcato) is on the board of directors.

In a separate Form 3 filed with the SEC, Marcato also discloses that they own 71,184 participating interests whose return is tied to the value of TPHS common stock. 


About Marcato

Readers should be familiar with Marcato as we've covered how McGuire previously worked at Bill Ackman's Pershing Square before starting his own fund.  Like Pershing, Marcato focuses on fundamental research and often employs activist investing.  While Pershing often focuses on large caps, Marcato's focuses seems to be on midcaps.

McGuire was named one of Institutional Investor's "Rising Stars" this year.  And we've covered how Marcato has been involved in CXW, pushing for a REIT conversion.

Next week, McGuire will be presenting investment ideas at the Value Investing Congress in New York along with David Einhorn, Bill Ackman and many more hedge fund managers.  Perhaps he'll talk about TPHS, but we'll have to wait and see.  There's still time to register for the event here.


About Trinity Place (Formerly Syms)

Per the company's press release, Trinity Place Holdings' "current business plan includes the monetization of 16 commercial real estate properties and the development of 28-42 Trinity Place in Lower Manhattan. The company also plans to explore the licensing of its intellectual property, including its rights to the Filene’s Basement trademark, the Stanley Blacker and Maine Bay brands, the intellectual property associated with the well-known Running of the Brides event, and An Educated Consumer is Our Best Customer slogan."

Activist Investors Propose REIT Conversion For Corrections Corp of America (CXW)

Keith Meister's hedge fund Corvex Management just filed a 13D with the SEC regarding shares of Corrections Corporation of America (CXW). This activist filing signifies a brand new position for Corvex as they did not own it at the end of 2011 (the last disclosure).

Corvex has a 4.43% ownership stake in CXW with 4,410,000 shares. The 13D was filed due to regulatory thresholds being crossed on March 26th, 2012.

Longtime readers of Market Folly will recall that Bill Ackman's Pershing Square Capital previously owned a position in CXW (you can see their old thesis on CXW here). The hedge fund eventually sold out of the position entirely.

One of Pershing's former analysts, Mick McGuire, went on to form his own hedge fund: Marcato Capital Management. Marcato has actually joined Corvex in this activist endeavor as they own a 2.61% ownership stake in CXW with 2,596,023 shares.


Proposing a REIT Conversion

In the fine print of the 13D filing, the two hedge funds say that they think shares are undervalued and an attractive investment. They've had conversations with each other as well as management and the board to discuss various aspects of the business.

They've discussed enhancing shareholder value by converting the company into a real estate investment trust (REIT) for federal income tax purposes.

Corvex and Marcato believe that a REIT conversion would "result in a significantly lower cost of equity capital, increased growth prospects and a material increase in value for all the Issuer's shareholders based on current trading multiples of comparable publicly traded REITs."

This seems to be a trend as of late as American Tower (AMT) recently successfully converted to a REIT as well.


About Corvex

We've started covering Corvex because before founding the firm, Keith Meister was Carl Icahn's protege. He's now started his own event-driven firm and it's no surprise that he's taken an activist investment stance. It's been reported that Corvex was seeded with $300 million from Soros Fund Management.

Other senior managing directors at Corvex include Nick Graziano (formerly a portfolio manager at Leon Cooperman's Omega Advisors) and Michael Doniger (formerly a PM at SAC Capital's CR Intrinsic unit).


About Corrections Corp of America

Per Google Finance, CXW is "an owner and operator of privatized correctional and detention facilities and prison operators in the United States. As of December 31, 2011, the Company operated 66 correctional and detention facilities, including 46 facilities that it owned, with a total capacity of approximately 91,000 beds in 20 states and the District of Columbia."

Mick McGuire of Marcato Capital Likes SFN Group (SFN): Harbor Investment Conference

The Harbor Investment Conference took place late last week and featured a bevy of hedge fund managers sharing their latest investment ideas. Mick McGuire of Marcato Capital Management was one of the speakers and his pick was SFN Group (SFN). Before founding Marcato, McGuire previously worked at Bill Ackman's Pershing Square Capital Management.

The following is a guest post from Benzinga.com with a summary of McGuire's bullish case for SFN Group:

"Mick McGuire of Marcato Capital Management spoke at the Harbor Investment Conference yesterday and recommended SFN Group Inc (NYSE: SFN) to the audience.

McGuire, who is a former chairman of Borders (NYSE: BGP) is an activist investor in the midcap space, and he believes there is significant value in SFN Group. McGuire said that the market cap of SFN is equal to the enterprise value of this U.S. based staffing firm.

He likes SFN because its' normalized earnings power should exceed the historic levels, and it's trading at a lower earnings multiple.

The company owns a variety of different staffing firms, including Spherion and Tatum, as well as others. It staffs different types of employees, from the entry level worker, to a seasoned company executive. The company receives higher margins on higher paying jobs.

McGuire believes that a lot of companies could maintain a high percentage of temporary workers, as he believes that many companies will want to maintain employee flexibility, should unforeseen events occur in the economy.

With an enterprise value of only $550 million, and $100 million in expenses from SG&A removed, McGuire believes the company is poised to increase its value over time. The company also has a significant amount of net operating losses at both the federal and state levels, which should allow the company to double EBITDA over the next year. The only major expense the company has is capital expenditures, and the company recently made a major technology purchase for its systems, which should allow Capex spending to drastically slow down over the next few years. The increase in EBITDA goes straight to the company's free cash flow.

McGuire also mentioned that the company is buying back 5% of its stock, thanks in large part to the increase in free cash flow it's seeing.

McGuire said that he believes SFN has an implied stock price of $20.26 by 2012."

Benzinga has covered the Harbor Investment Conference extensively and we highly recommend reading their coverage of the event:

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