chart source: (bigcharts.com) click chart to enlarge.
The stock has closed under $14 per share for 21 consecutive days and saw a brief spike yesterday after the CEO bought 90,000 shares @ 13.03. The trade in my opinion is insignificant in light of the most recent prior trade the CEO did when he appeared on Jim Cramer's MAD MONEY and touted TITAN MACHINERY's future. 30 days later DAVID MEYER SOLD 300,000 shares @ $27.80 and received proceeds of $8,340.00.00 and CEO Peter Christianson sold 200,000 shares $27.80 for proceeds of $5.56 million. (more on Hyping of Shares (Unrealistic Guidance) that Directors used to take advantage of Stock Sales can be found here)
incorrect classification of the VAT asset as a non-monetary asset
coupled with the significant devaluation of the UAH resulted in an
overstatement of the Company’s assets (Prepaid expenses and other) as of
April 30, 2014 and an understatement of the Company’s loss (Interest
income and other income (expense)) for the three months ended April 30,
2014. This correction increased the Company’s Net Loss Attributable to
Titan Machinery Inc. by $2.3 million (from the previously reported $4.2 million to $6.5 million) and increased the diluted loss per share by $0.11 (from the previously reported $0.20 loss per share to a $0.31
loss per share). This correction is reflected in the accompanying
unaudited Consolidated Statements of Operations for the six-month period
ended July 31, 2014.Based on an evaluation of all relevant factors, the Company concluded that this correction was immaterial to the Company’s results for the three months ended April 30, 2014; therefore, the Company determined that an amendment of its previously filed Form 10-Q for the quarterly period ended April 30, 2014 was not necessary, and the correction will be reflected in future 10-K and 10-Q filings."
- FY2015 2nd quarter 10Q included a footnote regarding the covenants of Titan's $150 million indenture with Wells Fargo, specifically the 4th amendment in less than a year. What is interesting to not is that the underwriting only occurred 2 years ago and the investment banker found it seemed fir to make yet a 4th amendment.
Wall Street Money Mangers and Brokerages Are Looking the Other Way
The biggest mystery to the Titan Machinery trading activity is that 85% of the shares (according to Morningstar) are held by institutions.
The trailing twelve months ending July 31,2014 Titan has total net income of $690,000 and the stock @$13 a share values the company at $275 million. (or a PE of 398 on ttm basis)
With FY 2015 EPS Guidance now at $0.00 to $0.30 per share , if use the mid range of $0.15 eps, the shares are currently trading at PE of nearly 100!
Why is there such a disconnect with the fundamentals of this underlying business and the price of its stock market valuation? I am seriously thinking that these shares may be being manipulated. One director on the board who is also a founder of the company is the general partner of an underwriting firm for the company and may know more about why shares trade at such a huge premium.
Management of Titan can blame price of corn, the weak construction & agricultural economy, poor farming, the unrest with their footprint in the UKRAINE, but I blame The company's poor financial condition on GREED AND RELATED PARTY TRANSACTIONS