trucks

Owen Fletcher/The Wall Street Journal A woman cools off in a Deere tractor tire at an Iowa farm show.

Activist investor Mark Rachesky, a former protégé of Carl Icahn. has plowed into farm tractor tire maker Titan International Inc. with a 10.9% stake in the company’s stock.

Titan’s shrinking market share, its sinking stock price and recent strategic missteps make the company a target of opportunity for activists. Titan’s stock price is down 22% in the past 12 months, while the broad-market Standard & Poor’s 500 Index is up 23%. Titan was recently trading down 2.3% at $18.72 a share.

MHR’s regulatory filing on Titan did not reveal a specific purpose for the investment. The firm said it intends “engage in discussions with [Titan] management and others concerning the business and operations of the” the company. That’s the standard language activists use to signal their intent to use their large stakes to make changes.

A spokesman for Mr. Rachesky declined to comment further. Titan did not return a call on MHR’s investment.

Mr. Racheskys MHR Fund Management LLC reported Tuesday that it obtained 5.8 million shares of Titan in recent weeks, making the firm Titan’s second-largest shareholder behind mutual fund manager BlackRock Fund Advisors with 11.3%, according to Factset.

Mr. Rachesky, who also holds a medical degree, co-founded MHR after working as Mr. Ichan’s chief investment officer during the 1990s. While Mr. Icahn has a reputation for proxy fights and verbal skirmishes with other investors, Mr. Rachesky maintains a low profile. He’s known for being a value-minded investor who looks for access to the boardrooms of the companies he invests in.

Hes chairman of Lions Gate Entertainment Corp. and used his large stake in the TV and movie studio to defeat an alternative slate of board candidates in offered by Mr. Icahn in 2010. He’s also chairman of Leap Wireless International Inc. and a director for commercial truck maker Navistar International Corp. where he and Mr. Icahn own nearly identical 16% stakes.

Titan Chairman and Chief Executive Maurice Taylor has headed the Quincy, Ill. company for 20 years. Mr. Taylor built the company by methodically acquiring the off-road tire and wheel plants mostly discarded by large tire makers. His recent acquisitions include Goodyear Tire and Rubber Co. ’s farm tire business in Brazil. Mr. Taylor, whose gruff demeanor and protracted contract battles with the United Steel Workers Union earned him the nickname “The Grizz,” waged a brief campaign for the 1996 Republican presidential nomination.

Titan also makes wheel rims and tires under the Goodyear brand. It supplies tires for farm machinery built by Deere & Co and other farm equipment manufacturers. Farm sector sales make up about 60% of Titan’s $2 billion in annual sales. The company though has been steadily losing share in the tire replacement market for tractor tires. Replacement tires generally carry a higher margin than tires sold to new equipment manufacturers.

Titans share of rear-tire replacement market for tractors declined to 15% in 2013 from 22% in 2012, according to a tire trade publication. Five years ago, Titan’s share was 39% in 2009. Meanwhile, Titans share of the radial tire market for ag equipment has fallen by almost 60% since 2008. Experts attribute the decline to stiffer competition from tire industry heavyweights Michelin and Bridgestone and upstart rivals, such as India’s Balkrishna Industries Ltd. Titan has also suffered from series of strategic and operational misfires in recent years that have undermined investors’ faith in Mr. Taylor. The company repeated missed quarterly earnings guidance last year.

“There is a growing chorus from investors that the company should hire a production specialist and a chief operating officer,” said Lawrence De Maria, an analyst for William Blair & Co.

Titan moved aggressively into the tire market for large mining equipment by acquiring a Bryan, Ohio, tire plant in 2006 to produce tires for giant dump trucks. But Titan’s 63-inch diameter tires quickly developed a reputation for poor durability that kept Titan from making headway in the market. Moreover, prices for big tires and demand for them have been falling lately because of the downturn in the mining industry, making Titan’s ability to remain in the market even more precarious.

Mr. Taylor has spoken recently about shifting production away from mining equipment to construction machinery, specifically tires for large wheel-loaders. Analysts say Mr. Taylor also has floated the idea of breaking up Titan by selling the mining and construction tire business or spinning it off as a separate company. Corporate breakups are typically popular with activist investors, especially when the companies use the proceeds to buy back stock. But some analysts are skeptical that Titan’s stock would benefit much from a breakup.

“We dont believe there is an obvious way to split the company into parts, given that much of the tire and wheel production for both ag and mining happens at common plants,” said Jefferies analyst Stephen Volkmann. “We arent convinced the valuation for either separate business would be significantly different.”