Timken Co (TKR): Relational Investors Further Cuts Its Stake

Relational Investors has cut another slice from Timken Co (NYSE:TKR) stake, selling 1.4 million shares in the open market at an average price of $46.40 per share. The investor still remains a majority shareholder in the company with close to 5 million shares, which constitutes 5.41% of the company’s outstanding shares. According to a transaction report, half of the shares were sold at an average price of $47.45, and the other half at $45.25.

Ralph V. Whitworth

Relational Investors and its manager, Ralph V. Whitworth, are probably seeking to exit the stock, given that the current cut is the second in less than a month. On July 10, the investor decreased its stake from 9% to 7%, selling around 2 million shares.

Timken Co (NYSE:TKR) has recently spun-off its steel business, acquiescing to the hedge fund’s request. After the split, Ralph V. Whitworth’s Relational received 1.3 million or around 3% of the outstanding shares in the newly created company Timkensteel Corp (NYSE:TMST).  It is possible that the investor will continue to buy more of Timkensteel Corp (NYSE:TMST) shares with the proceeds from selling stock in the parent company.

Timken Co (NYSE:TKR), an industrial company manufacturing products for friction management and mechanical power transmission, issued its second quarter results on July 30, reporting lower than expected net income of $62.7 million, or $0.68 per diluted share on sales of $789 million, citing a fall in demand for its ball bearings and power transmission components.  The stock fell around 5% on the news, but has rebounded somewhat and trades now at $45.68. Despite the bleak results in the first half of the year, Timken Co (NYSE:TKR)’s management had remained optimistic, saying that it is winning new OE and aftermarket business in both Mobile and Process Industries Segments.

Other notable investors that hold important stakes in Timken Co (NYSE:TKR) are Richard Chilton’s Chilton Investment Company with 1.1 million shares, worth $50 million, and Cliff Asness’  Aqr Capital Management  who owns 900,000 shares with a market value of $45 million, as of the end of the first quarter. Also worth noticing, Mario Gabelli is bullish on the stock as well, with his fund Gamco Investors holding around 600,000 shares valued at $27 million as of the end of March.

Disclosure: None

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