MDC Investor Roystone Capital Ups Stake

Roystone Capital Management, a major institutional investor in MDC Partners has upped its stake in the company amidst a steady downturn in the price of company shares over the past two weeks.

According to an SEC filing earlier this week Roystone has increased its stake in the company to 5.7% or nearly 2.9 million shares, up from about a 4.4% stake or close to 2.2 million shares as of March 31.

The firm appears to be capitalizing on a downturn in the stock that started May 13th after MDC confirmed that CEO Miles Nadal was selling (and has since sold) nearly 40% of his stake in the company. The stock price, which had been at about $25, dropped 12% in one day and has continued to drift downward.

In mid-day trading Friday, the stock was down nearly 2% to $21, and down about 16% since the company announced Nadal’s decision to reduce his stake. Two weeks ago he completed the sale of 3.5 million shares to BMO Capital Markets, which is re-selling the shares as part of an underwritten offering.



According to an SEC filing BMO paid $23.14 per share, or nearly $81 million for Nadal’s stock. The company said that Nadal was selling the stake as part of a portfolio diversification effort.

With Nadal’s sale completed, Fidelity Management & Research Co. has become the single largest shareholder in the Toronto-based holding company with a little over 6 million shares, according to SEC filings.

Nadal now owns 5.6 million shares of Class A stock, or about 11.1% of the outstanding shares -- down from a little more than 18% before the sale. His stake could drop lower, as BMO has an option to buy 525,000 additional shares. That would bring Nadal’s total closer to 5 million shares, leaving him with about 10.1% of the firm’s outstanding Class A stock.

Roystone’s Richard Barrera didn’t return a call seeking comment on the firm’s move to buy more shares. 

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