After increasing its stake in Navistar International Corp (NYSE:NAV) just a few days ago, Mark Rachesky‘s MHR Fund Management has further inched up its holding in the company to 15.45 million shares by acquiring another 15,400 shares through its affiliated funds, according to a 13D filing with the SEC. The holding now represents 18.9% of the company’s outstanding common stock.
At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically delivered a monthly alpha of six basis points, though these stocks underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning over 142% and beating the market by more than 84 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise rather than large-cap stocks.
Mark Rachesky, a graduate from Stanford University, got a rich taste of activist investing while he worked for renowned activist Carl Icahn. In 1996 Rachesky launched his own fund, which currently has about $6.1 billion worth of assets under management. The market value of the fund’s public equity portfolio stood at $2.83 billion at the end of March, slightly down from $2.88 billion at the end of the previous quarter. The consumer discretionary sector represents more than 60% of the fund’s holdings and its top equity picks include Lions Gate Entertainment Corp. (USA) (NYSE:LGF), and Loral Space & Communications Ltd. (NASDAQ:LORL).
Follow Mark Rachesky's MHR Fund Management
Since June 8, MHR has indulged in three transactions that piled yet more Navistar International Corp (NYSE:NAV) shares onto its already bulging holding of the company. The price per share ranged from $23.58 to $25.49 in the latest transactions. The fund initiated a position in the $2.05 billion holding company engaged in manufacturing of commercial and military trucks, proprietary diesel engines, and school and commercial buses, in the second quarter of 2012. So far this year the stock of Navistar International Corp (NYSE:NAV) has slumped by nearly 25%. In comparison, the truck manufacturing industry has slid by 1.54% in the same time period. Although the turnaround strategy of the company’s management seems to be working, the pace of the recovery is in question, especially after the financial results for the company’s fiscal second quarter. A net loss per share of $0.78 for the quarter greatly missed the expectations by $0.60, while revenues of $2.69 billion were also $130 million lower than estimates. Carl Icahn, Rachesky’s former employer, is the largest stockholder of Navistar International Corp (NYSE:NAV) within our database, with his fund Icahn Capital LP holding 16.27 million shares valued at $480.04 million.
