Icahn Boosts Navistar Stake After Trucks Bet Hits Speed Bump

NEW YORK ( TheStreet) -- Activist investor Carl Icahn is doubling down on Navistar ( NAV) after launching a mistimed bet on truck manufacturers a year ago.

On Friday, Icahn disclosed that he's 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. That comes after Icahn opened a top position in the Lisle, Ill- based truck maker's shares when they were trading above $30 in the fall of 2011.

Icahn -- who is a top shareholder in Navistar -- also took a near 10% stake in truck maker Oshkosh ( OSK) 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 consolidate or induce drastic change.

The disclosure of Icahn's stake caused Navistar shares to rally nearly 20% to $28.69 in Friday trading, pulling the truck maker further from 52-week lows just above $20 hit earlier in in the week. Oshkosh shares rallied nearly 3% to $20.75. Year-to-date, Navistar shares are off nearly 25% while Oshkosh shares are down almost 3%.

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

In October, Icahn took a 9.8% stake in Navistar a maker of commercial trucks, busses and diesel engines. That move followed Icahn's disclosure of a 9.5% stake in armored vehicle maker Oshkosh ( OSK) last June.

In the 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 CNBC interview.

"Combining the two would be like combining Porsche and General Motors ( GM)," Brian Rayle a managing director of research at Northcoast Research told TheStreet in October, when speculation of a possible tie up began.

In a given day Oshkosh might make one or two specialty military or fire trucks, while Navistar can build five hundred commercial trucks a day, signaling that their operations differ greatly, noted Rayle, who also highlighted differing manufacturing practices as other headwinds for a deal.

Meanwhile, Icahn's trucks bet has so far been hit by continued weakness in government and military vehicle orders, which recently took a toll on Navistar's 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. However, a slate of directors Icahn nominated for Oshkosh's board -- and that proposed a set of asset sales and spending cuts -- have so far been slow to gain traction with the Wisconsin-based company's shareholders.

Still, in January, Oshkosh said that it would respond to investor concerns with "urgency," even after an Icahn slate of directors was voted down by shareholders.

Recently, Icahn's had more success with struggling gas giant Chesapeake Energy ( CHK), as a recent activist push has already precipitated investor representation on the company's board and a $4 billion Friday pipeline sale.

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

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