Founder of Equities Research. Stockdiagnostics Specialist

Founder of Equities Research. Stockdiagnostics Specialist
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Thursday, May 21, 2015

Will Securities and Exchange Commission Comment On Another Titan Proxy?

In 2013 the Securities and Exchange Commission Division of Corporate Finance sent Titan Machinery Comment letters regarding the company's DEF 14 A proxy statement and also sent comment letters regarding 2 other 2013 separate company filings. (each comment letter with Titan's responses can be found below).
  • DEF 14 A Proxy
  • Resignation of Auditor
  • FY2013 10K

Thursday May 7,2015, Titan Machinery (NASDAQ: TITN) filed a DEF 14 A Proxy .
4 Days later.......
On Monday May 11th Titan filed an 8K after the close, disclosing that the President of the Company, who is also listed as a founder, would no longer be president and will also step down from being a member of the board of directors. There has been no comment at this time from the management of Titan nor any information in the press regarding this dramatic and sudden change.

MAY 12,2015 Titan Machinery President to Step Down and Resign as Director (this link includes related party transactions and suspicous trading in the stock)

 Will the company need to file an updated DEF 14 A with the SEC prior to this June 2015 shareholder meeting so that all the investors will have full disclosure of this new change?

2013 Securities and Exchange Division of Corporate Finance Comment Letters
On April 24,2013 Titan Machinery filed a DEF 14 A proxy statement with the Securities and Exchange Commission. By the end of 2013 The Securities and Exchange Commission Division of Corporate Finance made the following Comments to Titan Machinery:


Thursday, April 25, 2013

Most OverPriced Stock Titan Machinery Files Proxy Statement

updated and edited typos at 10:52pm est.  

Sunday, May 17, 2015

TITAN BONDS UP 21% After 6th Amendment

***May 12,2015 Titan Machinery President to Step Down and Resign as Director

n Machinery Announces Management Chang

Titan Machinery (NASDAQ: TITN) $150 million convertible note (Feb. 2019) traded at an all time low on March 13,2015 @ $66.50 yielding 14.88% as the company's fundamentals have deteriorated in recent years.
  • In March the company announced that they expected to be in non compliance of the covenants in the $150 million convertible note with Wells Fargo. The company said the terms of the note require the Company to earn a minimum net income for the FY2015 period that ended as of January 31,2015.
On April 15,2015 Titan Machinery filed their 10K annual report with the Securities & Exchange Commission and included a new Footnote: SIXTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT .

Titan's Bonds have since jumped 21% and closed yesterday above $80.

ATTACHED Is the Original Convertible Note with All 6 Amendments Added in Different Colored Fonts. (282 of Pages of NOTES/DELETIONS/Replacements) Good Luck Figuring it out)

Investors shouldn't need a Philadelphia Lawyer to Figure Out the Terms of this Note. 

Tuesday, May 12, 2015

Titan Machinery President to Step Down and Resign as Director

 Titan Machinery Reports $30 million Loss and Directors are Exiting
Founder Peter Christenson To Step Down From Board
**read here to see when house of cards were built

President/Founder Steps Down
After the close last night, Titan Machinery filed an 8K with the Securities and Exchange Commission announcing that the company's  President, Peter Christenson, since 2003 will step down and take a consulting role with the company and continue to earn his $500,000 a year salary. Peter Christenson will also resign as a member of the board of directors. a position he also has held for 12 years..(there is no mention if Mr. Christenson will continue to receive spousal travel benefits).

Proxy Statement
Only 4 days ago Titan Machinery filed a DEF 14 A proxy statement for the upcoming FY2016 annual meeting which is to take place in June. In the proxy disclosure Christenson is disclosed as a board member and president but it is still not clear if shareholders receiving this new proxy will be notified of the sudden resignation in time for the June vote. NO mention of who the new nominee will be for the 9th board seat that will now be vacant.

8K Director Resigns
8 weeks ago another board member since 2003 , James Williams, also announced he will be resigning from the board. That announcement came the same day that management released a preliminary FY2015 warning to the street that the company would lose in excess of $30 million for FY2015.
Mr. Williams is the current Chairman of the Nominating Committee and also a member of the 3 person Audit Committee.

Related Party Transactions (Where all the $ Goes)
In related party transactions, Peter Christian is disclosed as an owner of C.I.Farm Power.

History of Related Party Transactions of Titan Machinery  (Where has All the Money Gone)

New Auditor=Less Disclosure
In the Spring of 2014 the company filed it's first DEF 14 A  using the new auditor Deloitte and Touche. Company stated it no longer was required  to disclose the transactions with the outside entity Dealer Sites LLC that management had held a position in because that equity interest had declined to less than 10%.
Although that disclosure was in the spring of 2014, Dealer Sites LLC continued to receive their mailings to the care of  Titan's treasurer Ted Christianson., although he supposively held less than 10% of such entity.
Dealer Sites LLC is important because less than 2 years ago TITAN increased their contract with Dealer Sites from $50 million to over $100 million and extended it out to 2028. This is prior to closing in excess of 10 location in that same period. There has been no disclosure as to whether any of the stores that have been closed were Dealer Sites lease locations. Titan is responsible for taxes and maintenance of those properties.

MAY 2014 Dealer Sites LLC address on tax bill was same as Titan Machinery  But in the April 10K and DEF 14 A in April 2014 the disclosure stated Dealer Sites LLC relationship with Titan Management no longer needed to be disclosed.

As of Spring 2015 mailings for Dealer Sites LLC are being sent to the firm C.T.  Corporations Systems.
Titan is disclosed as 1 of 250 companies that also has disclosure of that same address that CT Corporation states under Dealer Sites LLC.

Dealer Sites LLC disclosure from 2007

We (TITAN MACHINERY) lease real estate for 24 of our 34 stores from entities affiliated with Messrs. Meyer, Tony Christianson and/or Peter Christianson. We lease three dealership sites from Meyer Family Limited Partnership, for which Mr. Meyer serves as general partner and of which certain members of Mr. Meyer’s immediate family are limited partners; 18 dealership sites from Dealer Sites, LLC, an entity affiliated by common ownership with Mr. Meyer and Tony Christianson, who collectively owned 40% of Dealer Sites, LLC as of January 31, 2007, and for which Ted Christianson, our Vice President, Finance and Treasurer, serves as president and Mr. Meyer serves as an officer; the site for our Fargo outlet store from C.I. Farm Power, an entity affiliated by common ownership with Peter Christianson; one dealership site from Padre Partnership, an entity affiliated by common ownership with Peter Christianson, who is also the general partner; and one dealership site from Landco LLC, an entity affiliated by common ownership with Peter Christianson and Mr. Meyer."

Hanky Panky Note #4786

General Counsel/Corp. Compliance Officer/Secretary
Does the corporate Compliance Officer Need to be disclosed in SEC filings as an Officer of the Company? Should his Holdings be disclosed as well? I looked but I couldn't find Steve Noack name. It might be somewhere but I surely didn't find it.

Who is Aurora Distributing and Why did Titan Machinery  create this assumed name the day prior to FY 2015 3rd quarter closed?
  •  3. List the name and complete street address of all persons conducting business under the above Assumed Name, OR if an entity, provide the legal corporate, LLC, or Limited Partnership name and registered office address:
    Titan Machinery Inc.
    644 East Beaton Drive
    West Fargo, ND 58078
Mutual Fund Trading

In February 2015 Fidelity, an institution which held over 5% of shares outstanding  increased their holding in an afternoon trade of 805,000 shares. What is strange is that Titan common stock averages about 100,00 shares a day and this unusual block was traded in what appears to be one transaction. Who sold those shares? How was the trade orchestrated? Its peculiar because nearly 85% of shares outstanding are so tightly held by a handful of insiders and institutions, so how would a person or an entity have such a block of stock and then sell it without disclosing that their new position (balance) has been reduced?

Suspicious trading/Auditor Resignation
It was less than 2 years ago that the company's original auditor abruptly resigned after the FY2014 shareholder meeting which coincided with very suspicious trading activity of Titan Machinery's common stock prior to the Fourth of July market holiday.
5 months after the Accounting Firm resigned the Securities and Exchange Division of Corporate Finance filed the following comment letter to Titan Machinery .

More Suspicious Trading March 2015
After close on March 9th Titan released disappointing warning that year end numbers would be disappointing and the shares were halted after hours. Titan Machinery (NASDAQ: TITN) suspiciously traded down 6% that day while the overall markets were all higher.

Wells Fargo Changes the Rules
The Titan Machinery Bonds are another can of worms.

Wednesday, April 29, 2015

"Gold is Only Answer" Fred Hickey Tweets "Stock Market is Toast",

Top Short Picks from Equities Research 

 Stratasys is now trading @ $42 this morning pre-market after the company announced last night after the close weak fundamentals.

Equities Research Warned on Shulman @$48 on April 7th and shares closed last night under $42.

Equities research Warned on Titan Machinery @ $30 and shares fell to a ytd low on March 10th @ $12.10. Shares have since gained 31% trading at a Market Capitalization of $310 million. Equities Research continues to warn on TITAN as it trades at a forward PE over 700.

Follow Fred Hickey on Twitter here

Tuesday, April 21, 2015

A Warren Buffett Quote About Cash Flows

Every year in the Berkshire Hathaway Inc.(NYSE: BRK $213,725.00) annual reports, chairman Warren Buffett shares his investment philosophy and strategies.

I recently went through each annual report since 2000 and did a search for the phrase "cash flow".
Each report averages about 20 pages and after searching 15 reports the phrase "cash flow" only was found once. (in 2000)


Warren Buffett, Chairman of Berkshire Hathaway: click to  <2000 Annual Report:

"Common yardsticks such as dividend yield, the ratio of price to earnings or to book value, and even growth rates have nothing to do with valuation except to the extent they provide clues to the amount and timing of cash flows into and from the business. Indeed, growth can destroy value if it requires cash inputs in the early years of a project or enterprise that exceed the discounted value of the cash that those assets will generate in later years.
Market commentators and investment managers who glibly refer to growth and value styles as contrasting approaches to investment are displaying their ignorance, not their sophistication. Growth is simply a component--usually a plus, sometimes a minus-- in the value equation."

A Favorite Blog About Finance, Economics and Public Policy

Stone Street Advisors is one of the top blogs I follow to learn about fundamental analysis. The founder of Stone Street is Jordan Terry, here is his profile summary from his twitter handle @The_Analyst .
 (Founder & MD, Stone Street Advisors LLC. L/S fundamental value & special situations research/idea generation for Hedge Funds
Here is a great post he published yesterday along with a link to a 7 page report titled : 
  • P/E Ratios – You’re Doing it Wrong

    " Here, I explain why it is imperitive for traders and investors alike to understand the drivers of relative valuation ratios like P/E – free cash flow to equity, equity cost of capital, and long-term growth rate – so that comparisons between firms, across industries, and over time have context, rendering comparison and analysis far more useful than just looking at current and historical levels or averages." 

    Readers should follow Jordan Terry at twitter.