Titan International Inc (TWI): MHR Fund Management Continues to Buy Shares as Stock Declines Further

As two new filings with the Securities and Exchange Commission showed that Mark Rachesky‘s MHR Fund Management has recently boosted its stake in Titan International Inc (NYSE:TWI). The investor has bought 505,000 shares of the company, raising its stake to slightly above 8.0 million shares. MHR holds an activist stake that, following the increase, amasses 14.9% of the company’s common stock. The securities have been bought in three transactions at an average price of $10.41 per unit.

Titan International Inc (NYSE:TWI)

MHR Fund Management was founded by the former employee of Carl Icahn‘s Icahn Capital in 1996. The fund currently manages an equity portfolio worth around $2.91 billion, concentrated in eight positions, the largest share being allocated to the Services sector, followed by Technology and Consumer Goods. Titan International Inc (NYSE:TWI) has been in MHR’s equity portfolio since the fourth quarter of 2013 and since the beginning of the year Mr. Rachesky raised the stake significantly from 2.60 million shares held initially.

Meanwhile, the stock of Titan International Inc (NYSE:TWI), a $540 million producer of wheels and tires, slid by over 45% since the beginning of the year. The decline came on the back of weak financial results that missed the estimates by big margins. For the third quarter, Titan’s sales slid to around $450 million, down by 9.6% on the year, while GAAP net loss even though it narrowed to $0.17 per share from $0.38 in the previous quarter, was still significantly down from a net profit of $0.15 posted for the same period of last year.

The company’s financial results fell amid a significant slow down in the construction, mining and agriculture, which are the main markets for the company. However, the stock was one of the top losers in the farm & construction equipment industry and sank much lower than many of its peers, as the industry lost around 5% year-to-date. Analysts prefer to keep their concerns up regarding Titan International Inc (NYSE:TWI)’s future as the company is expected to non-GAAP EPS of around $0.10 for the current year, which is significantly down from $0.78 in 2013. Moreover, the stock went through several downgrades recently as Zacks and TheStreet both downgraded the stock to ‘Underperform’ and ‘Sell’ respectively

Investors on the other hand seem to like Titan International Inc (NYSE:TWI) and several funds bought the stock as it lost ground. In this way, out of more than 700 funds that we track, 17 disclosed long positions in the company, up by four funds over the quarter. However, despite the number of funds holding the stock going up, the aggregate value of their positions decreased by around $37.15 million to $193.30 million. Jeffrey Smith’s Starboard Value is one of the funds that added the company to their equity portfolio during the July-September period and disclosed holding 500,000 shares in its latest 13F filing.

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