Hotchkis & Wiley Capital Management reduced its stake in Navistar International Corp. (NAV, Financial) by 27.5% on Sept. 30.
Hotchkis & Wiley was founded in 1980 in Los Angeles. The firm is interested in undervalued companies with considerable potential for appreciation. The investment team examines a company’s tangible assets, sustainable cash flow and potential for improving performance.
The firm sold 2,196,041 shares for $22.89 per share. The transaction had an impact of -0.22% on the portfolio. The firm now holds 5,798,651 shares.
Navistar International manufactures commercial and military trucks, diesel engines and buses. It also provides retail, wholesale and lease financing services for trucks and parts. The company was founded in 1902 and is headquartered in Lisle, Illinois.
Navistar has a market cap of $1.85 billion with an enterprise value of $6.3 billion. Its forward price-earnings (P/E) ratio is 38.2, and its price-sales (P/S) ratio is 0.23.
GuruFocus ranked Navistar’s financial strength 4 of 10. The Piotroski F-Score of 5 indicates the company has a stable financial condition. However, the low Altman Z-Score of 0.6 ranks in the distress zone, which implies the possibility of bankruptcy in the near future. The company’s cash-debt ratio of 0.14 is below the industry median of 0.34.
GuruFocus ranked the company’s profitability and growth 4 of 10. It has an operating margin of 2.5% and a net margin of -1.3%. Its return on assets (ROA) of -1.8% underperforms 87% of other companies in the global truck manufacturing industry. Its return on capital (ROC) of 12.6% underperforms 52% of its competitors.
Carl Icahn (Trades, Portfolio) is Navistar’s largest shareholder among the gurus. He holds 19.9% of outstanding shares, which is 0.94% of his total assets managed. Hotchkis & Wiley is the third largest with 7.1% of outstanding shares, which is 0.57% of its total assets managed. Other gurus with positions in the company are Mario Gabelli (Trades, Portfolio) and Murray Stahl (Trades, Portfolio).
Navistar is one of two truck manufacturers in the firm’s portfolio. The other is PACCAR Inc. (PCAR, Financial). Hotchkis & Wiley has been reducing its stake in Navistar since the first quarter.
The DCF Calculator gives the stock a fair value of $-14.88; it was trading at $22.34 on Thursday.
Disclosure: I do not own stock in any companies mentioned in the article.
Start a free 7-day trial of Premium Membership to GuruFocus.
