The Insider Buys Brief: Navistar International Corporation

| About: Navistar International (NAV)
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Summary

Two big insiders increase their stake in the Navistar International Corporation.

Legendary activist investor Carl Icahn increases his stake in Navistar International by 13.5% with an additional investment of $57.86 millions.

Mark Rachesky of MHR Fund management increases his stake in Navistar International by 4.01% with an additional investment of $15.59 millions.

Welcome to The Insider Buys Brief. In this brief, I am covering Navistar International (NAV) following the insider purchases by two insiders.

Navistar International Corporation

Navistar International Corporation is the holding company of Navistar Inc. and Navistar Financial Corporation. The company is a manufacturer of International brand commercial trucks, IC brand buses, military vehicles, and MaxxForce brand diesel engines.

Key Information

Currently, NAV is trading at a price of $32.87 with an average volume of 0.9 million.

Market Cap:2.68B EPS:-7.60 Dividend: -
Debt/Equity:NA EPS Next Year:1.51 Forward P/E: 21.33

The cash flow of the company improved considerably in the latest quarter of 2014 and is a positive indicator.

Source: Data taken from nasdaq.com.

Currently, financial institutions hold a huge percentage (99.9%) of NAV. Retail ownership of the company (0.1%) is miniscule. High ownership of big institutions and insiders in this company is a positive indicator.

Source: Data taken from nasdaq.com.

The top 5 institutions together hold 65.84% of the company as of the last quarter. After last week's buy, Carl Icahn is the top holder of this company.

Institution Name Reporting Date Units held Ownership % Change %
Franklin Resource Inc 09/30/2014 14.8m 18.14 1.63
Carl Icahn 09/30/2014 14.3m 17.62 0
MHR Fund Management 09/30/2014 14.0m 17.19 0
Gamco Investors Inc 09/30/2014 5.6m 6.94 6.03
Discovery Capital Management 09/30/2014 4.8m 5.95 -2.41

Insider Purchase Information: (SEBI Filings)

Carl Icahn bought 1,935,000 shares valued at $57.85 million with an average price of $29.90. Board Member Mark Rachesky bought 515,247 shares valued at $15.59 million with an average price of $30.27.

# Transaction Date Insider Name Title Amount of Securities Purchased Purchase Price Total Investment Increase in Securities
1 12/17/2014 Carl Icahn 10% Owner 1,935,000 $29.90 $57,856,500.00 13.5%
2 12/17/2014 Mark Rachesky Board Member, 10% Owner 515,247 $30.27 $15,596,602.00 4.01%

The stock performed poorly over the last one year. Both Carl and Mark bought the stock near the 52 week low after recent declines.

Source: Data taken from finviz.com.

There are no insider sales reported for Navistar International in the last three months. Over the last 12 months, the insider purchase volume is far more than the insider sales volume and it is a positive indicator.

Source: Data taken from Nasdaq.com.

Conclusion

For the past one decade, Navistar is plagued by issues with its bet on a new diesel engine technology that failed to meet US regulations. Warranty costs related to failed technology in the prior engines is a drag on the profitability of the company. Navistar is on a slow path to recovery from that major misstep.

Carl Icahn is building stake in this company over the last few years while it is struggling to come out of the misstep. Carl Icahn's recent conviction buy near the 52 week low is good indicator of the undervalue of the stock. Carl Icahn has considerable stake in the company with two board members representing him.

Board member and insider, Mark Rachesky of MHR Fund management made an investment at around the same price as Carl Icahn which doubly ensures the undervalue of the stock.

After the reporting of these recent purchases, the stock raised quickly to around $32.87. Investors can still expect some good return in the long run if Navistar completely recovers from the past issues with the backing of Carl and Mark at board level.

Investors who believe in Carl's ability to generate good returns can add this stock to their watch list and look for a good entry point at around the 52 week low.

Disclaimer: The author is not a registered financial advisor and does not purport to provide investment advice regarding decisions to buy, sell or hold any security. Before making any decision to buy, sell or hold any security mentioned in this article, investors should consult with their financial adviser. The author has relied upon publicly available information and the author provides no guarantee on the reliability of that public information. The author undertakes no obligation to update this report based on any future events or information.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.