Hedge fund manager Mick McGuire is not an art collector and has never felt the thrill of bidding in a Sotheby's auction, where adrenaline spikes with each multimillion-dollar sale of a Cezanne, Rothko or Picasso. Still, he has ideas on how the 269-year-old auction house might do better for shareholders, and since June has built up a 7 per cent stake to allow him to take some of his proposals to management. A former partner at William Ackman's Pershing Square Capital Management, McGuire is now running Marcato Capital Management, one of America's hottest hedge funds. The Harvard MBA graduate is relying on his expertise in analysing balance sheets in making his approach for Sotheby's, which attracts collectors from all over the world. Selling Sotheby's glass-front world headquarters on Manhattan's upper East Side is just one possibility, and the company's small lending business might rely more on debt than cash, according to people familiar with McGuire's ideas but not authorised to speak publicly. On Wednesday, Sotheby's signalled it understands the hedge fund's concerns, saying it will review financial strategies, leaving the door open to raising its dividend and taking on debt. "Each of these options presents possible advantages and disadvantages; all are complex," Sotheby's chairman and chief executive Bill Ruprecht said. "We are determined to fully exploring every avenue and we are committed to pursuing return of capital alternatives." When McGuire's Marcato Capital Management started the process of buying Sotheby's shares this summer, it marked the 37-year-old manager's fifth activist campaign in less than three years of running the firm. McGuire notified regulators and the company of his plans in June and was soon joined by others. Three weeks later, Daniel Loeb's Third Point put out a filing and now owns 5.7 per cent. Nelson Peltz's Trian owns about 3 per cent and analysts say he has ideas on improvements. While managers cannot work together, they can compare notes. And people familiar with Marcato Capital Management's proposals say they are likely to be complimentary to Loeb's ideas, which may focus more on operational improvements. Many activist investors make their demands for change publicly. Loeb created a website during his battle with Yahoo and releases his letters to management in filings. So far, McGuire has stayed out of the limelight by speaking at only a handful of conferences and declining most interviews. And even Loeb, who has an impressive art collection, has been calm in this fight, saying only that he planned to "engage in a dialogue" with Sotheby's. At Marcato Capital Management in San Francisco, McGuire does most of the work himself, including calling up chief executives at target companies. Bets on real estate and agribusiness company Alexander & Baldwin and DineEquity have been winners. In Sotheby's, McGuire and others found a one-of-a-kind business that has been largely ignored by Wall Street analysts and is still smarting from the effects of a price-fixing scheme with rival Christie's two decades ago. Sotheby's paid a US$45 million fine in the criminal case and its former chairman, Alfred Taubman, went to prison. In signalling that Sotheby's is ready to make some new choices, Ruprecht said the company "is committed to healthy two-way communication with our shareholders".