A29

Titan Machinery: Doesn't Anybody Look at Valuation?

As an investor you must feel very good today as you had disclosed that you were heavily short TITN and the stock certainly has taken a major hit.

I prefer to look at TITN from a PC to earnings growth point of view in seeing if it is fairly valued. To try and not be too wordy I will try and keep my remarks to a minimum.

Last qtr E/sh was .25. I would assume contribution from the Midland acquisition was not much in this number as acquisition did not close until May. Assuming a continuation of the same level I can certainly have faith that a yearly E/sh of $1.00 is very achievable (in line with guidance that the company has provided). In last company web cast I believe it was said that there was further cash available in excess of $100M for further acquisitions. Assuming the 1 to 3 purchase to sales ratio, $100M would likely result in $300M of yearly sales for the company. This should then result in at least an additional $.50 earnings (yearly). Taking these factors together I believe 50% earnings growth could certainly be achieved over the next year or two. With earnings growth of that level, I certainly feel a PE of 30 is not unreasonable. Beyond that a further stock issuance could be needed but another 3M shares added to 16M would not dilute share value significantly (in addition don't forget that profit from existing operations will also provide cash input).

I have several farmer friends that live here in my area and via discuss with them believe that there are several small private equipment sales companys available with older owners that would like to sell their businesses. In addition, the Ag area is a good business sector to be in as farmers are making good money as they should and have more money then normal to buy new equipment. Farmers like to deal with people they feel they can trust and I believe TITN brings the correct experience and attitude to the party.

Obviously I am long on TITN and today has not been a good day (am holding on to what I have and plan to further add to my position).