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Will AGCO Corporation (AGCO) Turn Around With an Insider and an Activist Investor Bullish on the Stock?

As we keep tracking the insider trading moves among different companies, we spotted some activity around AGCO Corporation (NYSE:AGCO). A director of the company has been loading up on shares over the last year. This director is Mallika Srinivasan, and she currently owns around 8.04 million shares, directly and through two entities, Tractors and Farm Equipment Limited and TAFE Motors and Tractors Limited, where she serves as the CEO and Chairman. Overall, between October 3 and October 15, Srinivasan purchased approximately 1.01 million shares of the company under a stock purchase plan signed between AGCO Corporation and Tractors and Farm Equipment. The average price per share amounted to $43.89 per unit.

AGCO Corporation (NYSE:AGCO)

Srinivasan is a notorious personality in India, being widely recognized for her commitment and contribution to the development of agriculture in the country. Tractors and Farm Equipment Limited, a company, where she serves as the CEO is one of the largest in India and in the world, in terms of value. Aside from serving on the board of AGCO Corporation (NYSE:AGCO), Srinivasan also established a partnership between the two companies.

Among the funds that we track at Insider Monkey, many are bullish on AGCO. Martin Whitman‘s Third Avenue Management and Clifton S. Robbins‘ Blue Harbour Group initiated stakes in the company during the second quarter and currently hold around 1.0 million and 830,900 shares respectively. The largest shareholder, however, is Hirzel Capital Management, led by Zac Hirzel, which decreased its position by 20% during the April-June period and currently holds some 1.25 million shares, the stake still amassing over 7% of the fund’s equity portfolio.

In the meantime, the stock of AGCO Corporation (NYSE:AGCO) lost over 20% since the beginning of the year, although over the last five years it appreciated by some 67%. The decline came on the back of weaker sales which impacted a decline of revenue to $2.75 billion in the second quarter from $3.05 billion a year ago. The EPS also fell to $1.77 from $2.15. Moreover, the company said earlier this month that it expects its net income to decline further and amount to $0.60-$0.65 per share in the third quarter and $4.10-$4.30 per share for the full year. This would represent a significant downfall from earnings of $1.27 and $6.01 per share for the third quarter and full-year 2013.

On the back of lowered expectations analysts have cut their price targets for AGCO Corporation (NYSE:AGCO). Citigroup reduced its price target to $48 from $55, reiterating ‘Neutral’ rating, while Macquarie reduced its target to $40 from $44 with ‘Underperform’ rating.

Nevertheless, Srinivasan kept her company’s stock purchase plan in order and kept acquiring stock. In addition, with activist fund, Blue Harbour Group, acquiring a significant stake in the company, we might see some developments in the near future. The company has also been constantly buying back its own stock amid the decline of the price, which has been a positive step taken by the company. All this make AGCO Corporation (NYSE:AGCO) an interesting opportunity but more for long-term investors rather than short-term.

Disclosure: none

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