Navistar International Corp (NYSE:NAV) is down by over 7% in trading today after the firm reported its 12th consecutive quarterly loss, for the fiscal third quarter of 2015. The firm reported a net loss of $28 million, or $0.34 per diluted share, wider than the net loss of $2 million, or $0.02 per diluted share, in the same quarter last year. Revenue was reported to be $2.54 billion, down from $2.84 billion year-over-year. The results also fell well short of analysts’ estimates, as Wall Street was expecting the firm to earn $0.08 per share on revenues of $2.75 billion.
Navistar International Corp (NYSE:NAV)’s fiscal third quarter was dragged down by burgeoning losses in its truck and global operations segments, despite gains in the parts and financial services segments. The truck segment tallied a loss of $36 million, compared to $3 million a year ago, while the global operations segment’s loss grew by $5 million to $26 million. Nonetheless, the parts segment reported $151 million in sales for the fiscal third quarter, up from $137 million in 2014, while the financial services segment had $26 million in sales, up from $24 million last year.
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According to the firm, while there was an increase in truck, bus and parts sales in North America, sales were lower in export truck and parts sales, in addition to the negative impact it incurred from its exit from the Blue Diamond Truck joint venture it had with Ford Motor Company (NYSE:F). Nonetheless, Navistar President and Chief Executive Officer Troy A. Clarke said that the firm is actively seeking to improve revenue and cut costs. According to the executive, his team likes their company’s chances coming up on the 2016 buying season, especially for larger fleets. For the fiscal third quarter, the firm had $775 million in manufacturing cash, cash equivalents, and marketable securities. It also refinanced its existing term loan, improving its liquidity by $313 million and extending the maturity of the loan to 2020.
These measures being taken by Navistar International Corp (NYSE:NAV) as well as future plans to improve revenues may have been anticipated by hedge funds as they were generally bullish on the firm at the end of June, as we will discuss later on. It should also be noted that activists like Carl Icahn and Mark Rachesky, have continually increased their stakes in the firm in the hopes of influencing a turnaround, yet have been unable to do so as of yet. Icahn started building his stake in Navistar in 2011 while Rachesky just recently bought more shares of the struggling firm.
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Why do we say hedge funds had a generally bullish opinion on Navistar International Corp (NYSE:NAV) during the second quarter? This is because there was a substantial inflow of capital into the stock in said period despite fewer hedge funds among those we track having a long position in the stock. From April through the end of June, there was a 25.58% decrease in hedge fund holdings in the stock, to $946.15 million. The number of hedge funds long in the stock also decreased by five from the previous quarter to 16. However, the stock plunged by 40.58% in the second quarter which means that those hedge funds who were long in the stock on June 30 ended the quarter with more shares of the stock. What’s more, over half of Navistar’s outstanding shares are held by these hedge funds.
Based on Insider Monkey’s data, Navistar International Corp (NYSE:NAV)’s biggest fan in the second quarter was Kevin Michael Ulrich and Anthony Davis’ Anchorage Advisors. The firm ended June with 28 million shares of Navistar, all bought within the second quarter. As mentioned, another notable bull is Icahn; his hedge fund Icahn Capital LP held 16.27 million shares of Navistar on June 30. However, on the other side of the fence is Rob Citrone’s Discovery Capital Management, which in the second quarter dumped all 3.82 million shares of the company it previously held.
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