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Hedge fund now owns almost 11 percent of Titan

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QUINCY, Ill.—MHR Fund Management has put itself in a position to become Titan International Inc.'s second largest shareholder.

The hedge fund, headed by Mark Rachesky, disclosed in a Securities Exchange Commission filing that it now holds about 5.84 million shares of the tire and wheel manufacturer. The total represents almost 11 percent of Titan's common stock.

About 2.6 million of the stock package is owned outright and the remainder is being held under a call option, due in July.

While MHR's stock purchase raised a few rumors of a possible takeover bid by the hedge fund, Titan CEO Maurice Taylor said he was not fazed by the speculation, pointing out that it's nothing more than that. "I'm not concerned—I just serve," he said. "In fact, I'm honored" that MHR has taken an interest in Titan.

He said he has met with Rachesky, enjoyed his company and felt comfortable with him. MHR generally invests in distressed or under-valued companies.

"I was with him (Rachesky) to tour three of our plants," Taylor said. "He said we were undervalued. And I agree with him. He's a very smart guy and has a great reputation" as an investor. "I was very impressed with him."

Taylor said he believes MHR will be a long-term shareholder of the company, and Titan will benefit from the investment as it moves ahead with its growth plan, which includes possible acquisitions.

"He told me he thinks his money is safe," Taylor said, adding that Rachesky did a year-long study of the business before making the investment.