Mark Rachesky’s MHR Fund Management has filed a 13D with the Securities and Exchange Commission, which revealed that the investor sent a letter to Loral Space & Communications Ltd. (NASDAQ:LORL) and requested a representative of the fund to be added to the recommended slate of directors as a Class III director, ahead of that company’s 2015 annual shareholder’s meeting. MHR Fund Management has an 8.14 million shares stake in Loral, representing 38% of the company’s common stock. That is a slight increase from the 8.13 million shares it reported as at the end of 2014.
MHR Fund Management was founded by Rachesky in 1996, after he previously worked with famed activist investor Carl Icahn. Rachesky later famously bumped heads with Icahn in 2009 over Lions Gate Entertainment Corp. (USA) (NYSE:LGF), which both investors had large stakes in. Rachesky, Lions Gate’s largest shareholder at the time, came out in support of the company’s management in the midst of Icahn seeking to stir things up. Rachesky is now himself the chairman of Lions Gate, and continues to be its largest shareholder. MHR Fund Management held just seven positions in its portfolio at the end of 2014, and has been invested in the same seven companies for the past three quarters. The value of its equity portfolio stood at $2.88 billion at the end of the year.
The slight increase in its Loral Space & Communications Ltd. (NASDAQ:LORL) stake, while not significant, is at least noteworthy for the fact that it’s the first time the position has been changed in over four years. Loral was in fact Rachesky’s top pick since late 2010 through 2011, until his stake in Lions Gate (which has also remained unchanged for years) eventually surpassed it in terms of value as he helped turn that company’s fortunes around. His stake in Loral was valued at $639.89 million at the end of the year.
Loral Space & Communications Ltd. (NASDAQ:LORL) on the other hand is down 5% since the start of 2011, and also down over 3% over the past six months. Rachesky, who already serves on the board of Loral as non-executive chairman, reportedly made a deal to sell Loral to the Ontario Teachers’ Pension Plan for $85 per share late last year, but the deal eventually fell through after Loral Space & Communications Ltd. (NASDAQ:LORL) was ordered to pay $45 million to ViaSat, Inc. (NASDAQ:VSAT) to settle a patent infringement suit, and the two sides couldn’t agree on who would cover the fee. It’s rumored the two sides could seek to reach a deal at a later date.
Other shareholders of Loral Space & Communications Ltd. (NASDAQ:LORL) who would benefit from such a deal include James Dondero’s Highland Capital Management, Christopher Pucillo’s Solus Alternative Asset Management, and billionaires George Soros and Leon Cooperman.
Lions Gate Entertainment Corp. (USA) (NYSE:LGF) continues to be Rachesky’s top pick, and the turnaround of the movie and entertainment company that he helped orchestrate has proven financially lucrative to him and his fund. Rachesky owned the same 51.26 million shares at the end of 2014 that he did at the end of the third quarter of 2011. However, those shares were most recently valued at $1.64 billion compared to just $353.71 million back then, a profit of more than $1.25 billion in less than four years.
While Icahn is long gone as an investor of Lions Gate Entertainment Corp. (USA) (NYSE:LGF), having sold off his large stake during the third quarter of 2011, numerous other investors have benefited from Rachesky’s work, including current shareholders Matrix Capital Management, managed by David Goel and Paul Ferri, and billionaires Israel Englander and Ken Griffin.
A 14.50 million share stake in Navistar International Corp (NYSE:NAV) was Rachesky’s third most valuable position at $485.46 million at the end of 2014. Rachesky opened the position during the second quarter of 2012, and has gradually increased it over the nearly three years. Rachesky also sits on the board Navistar International Corp (NYSE:NAV), and was successful in apppointing another member of his fund, Michael Sirignano, elected to the board early last year.
Navistar International Corp (NYSE:NAV) has not proven to be as successful an investment as Lions Gate, and is mostly flat since the summer of 2012. Not even the decline in gas prices has been able to benefit shares of the commercial and military truck and bus manufacturer, which are down by 25% over the past six months. Among other shareholders of Navistar are Carl Icahn, who has the largest stake among funds we track, with 16.27 million shares, and Mario Gabelli’s GAMCO Investors, which held 6.10 million shares at the end of 2014.
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