This just in. Marcato has sold 2.05m shares of BID back to Sotheby's for $73.8m which ought to be a price around what the fund paid just over three years ago. (The chart above shows Marcato's entry point some time before July 23rd 2013 when they filed their 13D. The red line represents Sotheby's historic trading floor/ceiling of $40.) The 2m shares represent about 40% of Marcato's recent holdings. The sale should leave Marcato with a stake still above 5% of the company:

On October 3, 2016, Sotheby's (the "Company") entered into a Share Repurchase Agreement (the “Share Repurchase Agreement”) with funds managed by Marcato Capital Management LP (the “Sellers”), pursuant to which the Company agreed to purchase 2,050,000 shares of common stock, par value $0.01 per share, of the Company (“Common Stock”) from the Sellers (the “Repurchase Transaction”) for an aggregate purchase price of $73,800,000. The Company’s payments under the Share Repurchase Agreement were funded with cash on hand.

What does this all mean? Although Marcato has sold a large portion of its stake (3.8% of the total shares) it retains 4.9% ownership as well as its seat on the board. While this changes little in the day-to-day for Sotheby's, it may be an important milestone in the activist story to transform Sotheby's which we explain for subscribers below: