Marcato's McGuire bets United Rentals will climb during recovery
NEW YORK (Reuters) - Hedge fund manager Mick McGuire said on Tuesday that he is betting on backhoes and concrete mixers with a new investment in equipment rental company United Rentals.
McGuire's Marcato Capital Management owns a 4.7 percent stake in United Rentals, and he expects fresh construction spending to give the company a big boost. Equally important is that contractors, still jittery after the recession, now appear more ready to rent than to own big equipment.
"We are calling this renting the recovery," McGuire said at the 9th annual Value Investing Congress in New York.
United Rentals share price climbed nearly 3 percent after he spoke. The shares were up 2.9 percent at $56.62 in late trade.
With $2.25 billion in assets, Marcato Capital Management is one of the year's hottest hedge funds. It returned 17 percent through August while the average hedge fund gained only 7 percent.
The San Francisco-based fund took the position on United Rentals during the second quarter, but this was the first time McGuire spoke about it publicly.
Speculation about a possible acquisition and share buyback could send United Rentals' stock higher, McGuire said. Last year, United Rentals bought RSC Holding and now has 15 percent of the fragmented U.S. equipment rental markets
At the same time, McGuire outlined possible risks, including a chance that United Rentals management over spends during the recovery.
While Marcato Capital Management is generally an activist investor, it has not made a 13-D filing on United Rentals. "But we are committed to engaging and staying close with management," McGuire said.
(Reporting by Svea Herbst-Bayliss; Editing by Leslie Adler)