Billionaire Carl Icahn and Mark Rachesky Bet Big on This Stock

ICAHN CAPITAL LPMark Rachesky’s MHR Fund Management on Tuesday disclosed an increase in their position in Navistar (NAV) to just over 10 million shares, which brings their ownership of the company close to 15% (see other stocks owned by MHR Fund Management, including Lions Gate Entertainment (LGF)).  As a result they have passed Carl Icahn to become NAV’s largest hedge fund shareholder.  MHR filed their original 13D on June 15th, which disclosed that they had acquired 13.6% of the outstanding shares.  Possibly because of further declines in the company’s stock since that time, MHR decided that the potential for NAV to enter into an M&A deal or otherwise survive its current troubles- the company has lost about 39% of its value since the beginning of the year as it experiences difficulties developing a new model of truck engine- was an interesting profit opportunity. Mark Rachesky formerly worked for Carl billionaire Icahn.

Carl Icahn (see his other top picks) has held a position in NAV for several months as he has publicly encouraged the company to merge with another of his holdings, Oshkosh (OSK).  He initiated his position in Navistar between June and September 2011, tripled his ownership in the fourth quarter of 2011 to finish the year with nearly 7.3 million shares, and increased his position to about 8.1 million shares in June.

Navistar has become a target for other activist and value investors.  Owl Creek Asset Management (see Jeffrey Altman’s stock picks) still held nearly 3 million shares of NAV at the end of March after selling about half of their shares in the first quarter.  Mario Gabelli’s GAMCO Asset Management, which held 2.6 million shares at the end of March, has since increased their holdings to 3.2 million shares.  Gabelli is a value investor likely attracted to the stock’s low price-to-earnings ratio.  The decline in NAV’s value so far in 2012 has left these funds in the red on the trade- however, the fact that Icahn and Rachesky are adding to their position as the stock falls indicates that they have some level of confidence the company’s value is being underappreciated in the market.

Navistar’s peers include Oshkosh (OSK) as mentioned earlier as a possible candidate for a merger; PACCAR (PCAR), a much larger company with a market cap of nearly $13 billion compared to NAV’s $1.6 billion and OSK’s $1.9 billion; and two smaller companies with less than a $300 million market cap, Commercial Vehicle Group (CVGI) and Miller Industries (MLR).  Likely because of the risk that Navistar’s engine project will fail to receive approval from the government or encounter other obstacles on the way to market, Navistar trades at a much lower P/E relative to its peers.  PCAR and OSK are both slightly down year to date compared to NAV’s 39% decline.

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!