) -- Investment manager

MHR Fund Management

has ousted activist investor Carl Icahn as the top shareholder of struggling truck maker


(NAV) - Get Report

, causing shares to rally.

With MHR onboard Navistar's stock, after Icahn launched a trucks bet in the fall of 2011 that hit a

speed bump

earlier in June on regulatory issues and weak public sector trucks and military spending, shares in the nation's largest trucks manufacturer are rising on the prospect of a shakeup or sale of the company.

Still, Navistar and its investors face a rough trucks ride in 2012 before any M&A speculation is borne out.

In a filing with the

Securities and Exchange Commission

, Mark Rackesky-run MHR revealed it holds roughly 9 million shares of Navistar, 13.6% of the company's stock, in an investment that tops Carl Icahn's stake, which he opened last October and boosted a week ago. Previously, MHR and the legendary activist invested in

Lionsgate Films


during an epic Icahn-led buyout


where he took a 30% stake in the

Hunger Games

film maker, but failed on takeover and activist efforts.

MHR said that it "may seek to engage in discussions with (the) management and others concerning the business and operations of the company," in its filing, signaling that it could become an activist Navistar shareholder, like Icahn.

The investment comes as speculation that



or U.S. industrial engineering giants like


(CMI) - Get Report

could partner or take a stake in Navistar, which is driving the company shares higher after they hit three-year lows in June.

Amid M&A speculation and Icahn's activist investment, JPMorgan analyst Ann Duignan said that downside risks and upside for the Lisle, Ill-based truck manufacturing company are "balanced," in a Wednesday upgrade from underweight to neutral. The company's biggest risks are its struggles to meet

Environmental Protection Agency

emissions standards on new truck lines, while the prospect of partners like Cummins, VW or

Fiat Industrial

could limit that downside.

Last week, Fiat chairman Sergio Marchionne said he wanted to increase the company's presence in the U.S., leading to speculation that Italian automobile and trucks giant could be interested in Navistar after taking a majority stake in


in 2009.

A full blown strategic acquisition of Navistar continues to remain an unlikely prospect, notes Duignan, citing the company's $3.2 billion of pension liability and its $2 billion of ordinary debt. Duignan estimates Icahn initiated a 9.8% Navistar stake at between $35 and $40 a share in October, making him unlikely to back sale attempts that would put his trucks bet in the red.

In Friday trading Navistar shares rose nearly 8% to $30.09; stemming year-to-date losses that remain above 20%. Still, Duignan of JPMorgan gives Navistar a $31 a share value when considering the impact of activist investors and potential European and industrial partners or bidders.

Although we believe that the drums of shareholder activity are likely to bang louder, we believe both

Volkswagen and Fiat are likely more at the consideration stage, if that far in their thinking," wrote Sterne Agee analyst Jeffrey Kauffman in a Tuesday note to clients, citing U.S. Department of Defense's Foreign Ownership, Control, or Influence provisions, the cyclicality of U.S. truck sales and shareholder provisions as possible headwinds to a deal.

Without M&A speculation and activist investors driving shares, Navistar may face a rough ride in the second half of 2012.

This week, Deutsche Bank analysts said that price declines and share expectations for Navistar in the second half of the year may be too high. "Navistar's current guidance assumes both positive pricing actions and market share gains in

the second half of 2012. In our opinion, both could be challenging, even assuming EPA certification over the next few months," the analysts noted.

In October,


took a 9.8% stake in Navistar a maker of commercial trucks, busses and diesel engines. Last Friday, Icahn upped his stake in Navistar to nearly 12% from 10.6%, buying up 883,200 shares at an average price of $24.44, according to a filing with the

Securities and Exchange Commission


Icahn -- who is a now the second leading Navistar shareholder -- also took a near 10% stake in truck maker


(OSK) - Get Report

last June, in an activist investment that comes amid falling government orders for trucks, fire engines and military vehicles. So far, Icahn's big rig play has performed poorly as he's struggled to get both truck makers to


or induce drastic change.

Navistar is one of the nation's largest commercial truck makers while Oshkosh is the leading U.S. military truck maker.

In both investments, Icahn has pushed for board changes and even indicated that both company's assets could be rationalized through a merger. After opening near his investments, Icahn said "I definitely think it would be a good merger. I think there would be a lot of synergy. I own stock in both and I think shareholders of both companies would benefit," in a December



"Combining the two would be like combining



General Motors

(GM) - Get Report

," Brian Rayle a managing director of research at

Northcoast Research



in October, when


of a possible tie up began.

Icahn's trucks bet has so far been hit by continued weakness in government and military vehicle orders, is expected to continue to weigh on earnings. Navistar recently said it's struggling to meet new government mandated emission standards for one of its truck engines and in March, the company cut its 2012 profit guidance to $5.25 a share from $5.75.

In late 2011, Icahn settled an activist push to nominate hostile directors to Navistar's board after the company said that the billionaire could put his directors up for election this year.

To be seen is whether MHR and Icahn will work in tandem to help push for change at Navistar after mixed results on a previous investment in Lionsgate Films. Recently Icahn's worked with activist investor

Southeastern Asset Management

on a newly launched investment in struggling gas giant

Chesapeake Energy

(CHK) - Get Report

, in a move that has already precipitated investor representation on the company's board and billions in

asset sales


For more on Icahn's Chesapeake Energy bet, see 5 ways Chesapeake Energy can be

saved from itself. See Carl Icahn's

investment portfolio

for more on the activists stock picks.

-- Written by Antoine Gara in New York