Tag - Cnh

The Russell 2000 (NYSE:IWM) continued to alternate between up and down days, with today being a designated “down” day to the tune of -3.05%. Some of today’s small-cap gainers were Interwoven, Inc. (Nasdaq:IWOV), Brinker International (NYSE:EAT) and Columbus McKinnon (Nasdaq:CMCO).

Other Market Watch highlights today included:

• Housing starts came in at the worst reading in history, sinking 15.5% in December to a unit rate of 550,000.
• The weekly claims report came in at 589,000 which was above the forecast of 553,000.
• The 4-week moving average for claims was at 519,250, up from 518,000 the previous week; the number of people filing for continuing claims was at 4.6M, up from 4.51M the previous week.
• The MBA Mortgage Application Index fell 9.8% this week, but it is still up 21.8% over year-ago levels. 
• Crude oil prices tumbled into the stock market opening, clearly rattled by the weak economic data and sloppy profit report from Microsoft.
• Losses in small caps were much deeper than for the big names, which reflects a “big is safer” mentality in play right now for investors. 
• Financial and energy shares were the primary sources of weakness today for stocks, while defensive plays like drug stocks lagged the overall market decline.
• Energy shares fell about 2.7% on the day, while the roller coaster world of bank stocks was down 5.9%.

Small Cap Gainers:

• Autonomy Corporation announced an agreement to acquire Interwoven, Inc.; IWOV shares closed 33% higher. See (Nasdaq:IWOV).
• Brinker International Inc. soared 32% after topping the profit forecast . . .

www.titanmachinery.com
Nasdaq: TITN
Priced Dec. 5, 2007
$51.0 million proceeds
$99.2 million post-money valuation

It’s too late for the IPO; the deal was priced in December. That was back when IPOs could get priced. Given the paucity of offerings in the current market, it seems like a good time to look at what companies have been able to go public, and Titan Machinery has the honor of being the top IPO in terms of aftermarket performance in the last six months. The stock has more than doubled since the deal closed on Dec. 5 and now has a market capitalization of $258 million.

This high flier operates in a grounded industry. It’s a chain of farm-equipment dealerships headquartered in Fargo, N.D. Titan represents agricultural and construction machinery made by CNH Global (NYSE: CNH), sold under the Case and New Holland brands. Its 39 stores are in North Dakota, South Dakota, Minnesota and Iowa. Hence, most investors could go through life without ever seeing one of Titan’s operations. The company’s customers, however, have come to see it as a reliable source for the parts and equipment they need to keep their own businesses operating.

Because demand for its lines is more or less fixed, Titan’s plan is to grow through acquisition. Most of its competitors are small, operating only one or two stores, and in some cases, the owners are interested in retiring and don’t have family members who want to take over. Since the IPO, Titan acquired Ceres Equipment, a Case-New Holland dealer in Roseau, Minn., that should add $11 million in revenue. Once a business is acquired, Titan can grow profits by standardizing processes, getting volume discounts on its inventory, and advertising more efficiently.

Titan Machinery Inc. (Nasdaq: TITN) has miles to sow before it sleeps. Cows and chickens and pigs need to be fattened, bread needs baking and the agro-fuel alliance keeps raiding the silo. Titan is doing its part: it has planters, combines, tractors, sprayers and, oh, one more way to profit from the boom in agriculture.

As one of the country’s largest dealers of new and used agricultural equipment, Titan owns 38 retail stores and two outlets in North Dakota, South Dakota, Minnesota and Iowa. Headquartered in Fargo, N.D., Titan’s sales are dominated by equipment from Case IH Agriculture and New Holland Agriculture; about 85% of revenue comes from agriculture, with the rest from construction equipment.

After 27 years in the business, Titan went public in December. Quite an auspicious outing: share prices have more than doubled since. That’s no mystery, considering record 2007 net farm income. Exports were up, helped by the weak dollar, and year-end stocks of key commodities were low. For 2008, USDA expects net income to rise 4.1% to $92.3 billion — 51% above the 10-year average. In all, it should be an exceptional year for producers, particularly those of corn, soybeans and wheat, the primal elements of the Midwest.

Acquisitions have helped as well. Titan in January bought Avoca Implement and Greenfield Implement, two Case IH farm equipment dealerships in southwest Iowa. In February, Titan acquired Ceres Equipment Inc., a farm equipment dealer of Case IH and New Holland brands in Roseau, Minn.

The purchase of Ceres continues management’s focus on gradually expanding its served area, said analyst Robert McCarthy at Robert W. Baird & Co. in a research note this month. “Titan’s ample balance sheet capacity can support considerable further acquisition activity.”

McCarthy estimated that Titan had a cash balance of $36 million at the end of fiscal 2008, on Jan. 31. He continued to recommend purchase, maintaining his initial “outperform” rating made in January and his $26 price target. Baird & Co. co-managed Titan’s IPO.