This New York-Based Private Equity Firm Has $750 Million Invested in Just 2 Stocks

New York-based private equity firm American Industrial Partners (AIP) invests in middle-market companies in the U.S. and Canada. Founded in 1988, it has completed over 125 platform and add-on acquisitions. It currently manages over $16 billion for its private capital investors. 

Its work focuses on acquiring or investing in industrial businesses with annual sales of over $500 million. 

“AIP has the capability to invest in all parts of the capital structure and special situations that do not fit the prevailing buyout model,” its website states. 

“Outside of the Firm’s core private equity capabilities, we invest in both primary and secondary credit, structured financings, debtor-in-possession and rescue loans, preferred and common equities and other instruments.”

While public company investments aren’t its core business, it finished the fourth quarter with $759 million in assets invested in just these two stocks: V2X (NYSE:VVX) and Titan International (NYSE:TWI).

Here’s why. 

Key Points About This Article:

• Private equity firm American Industrial Partners has two publicly traded stocks due to its exit strategy for them.
• Its investment in V2X (NYSE:VVX) has produced significant returns, and it’s not done yet. 
• Its second stock appears to be a more contentious investment.
• Earn up to 3.8% on your money today (and get a cash bonus); click here to see how. (Sponsored)

Aerospace and Defense Play a Big Part in AIP’s Portfolio

V2X is AIP’s most significant holding in its Q4 2024 13F report, accounting for 89.33% of its $759 million in assets. 

“V2X builds smart solutions designed to integrate physical and digital infrastructure – from base to battlefield – by aligning people, actions, and outputs. Formed by the merger of Vectrus and Vertex, we bring a combined 120 years of successful mission support. Our lifecycle solutions improve security, streamline logistics, and enhance readiness,” the company’s investor relations website states. \

If you’re unfamiliar with V2X, it was created through the July 5, 2022, reverse merger of publicly-traded Vectrus Inc. and privately-owned The Vertex Company. The combination created a company with $3.4 billion in revenue, $283 million in adjusted EBITDA, and an $11.3 billion backlog. 

AIP owned Vertex, which it acquired from L3 Communications in 2018 for $540 million in cash. Vertex Aerospace’s history dates to 1977. It was the product support division for the Beechcraft Company, an aircraft manufacturer. After a couple of acquisitions, Vertex became one of AIP’s portfolio companies. 

Four years later, Vertex acquired the publicly traded Vectrus in a reverse merger for $860 million. After completing the reverse merger, which valued Vertex at $2.1 billion, Vertex’s shareholders (AIP) owned 62% of the renamed V2X, while Vectrus owned the remaining 38%. 

Its Vertex Buy Was a Big Success

On July 5, 2022, V2X filed a Schedule 13D, indicating that AIP and its affiliates owned 18.59 million shares of the combined company, a 61.1% ownership stake. 

In the 32 months since, AIP has sold off approximately 4.42 million shares of V2X stock. As of Dec. 31, it owned 14.17 million shares, reducing its ownership stake to 44.89%. 

In the fourth quarter, AIP sold 2.5 million shares, cutting its holdings by 15%. That shouldn’t come as a surprise to most investors. Private equity firms don’t like to hold on to their investments for too long. In the fourth quarter, the stock hit an all-time high of $69.75. 

AIP has done well with its sales to date. With the share price down 27% from its November high, it’s likely biding its time to sell more. The current shares are valued at $723 million. 

Given the leverage prevalent in private equity-sponsored transactions, AIP has likely generated a significant return on its original 2018 investment.

If you are interested in V2X stock, you should buy it now before it returns to $60, where it traded just four months ago. 

What About the Other Stock?

With the size of the V2X shareholdings, the second stock AIP owned at the end of the fourth quarter is almost anticlimactic. 

In addition to V2X, AIP owned 11.92 million shares of Titan International, a manufacturer and supplier of wheels, tires, and undercarriage products for the Agricultural, Earthmoving, Mining, Construction and Consumer sectors. 

It owns these shares due to selling another of its portfolio companies, The Carlstar Group, to Titan in February 2024 for $296 million in cash (43%) and stock (57%). AIP acquired Carlstar in 2013. An eleven-year hold is an exceptionally long time for private equity to hold an investee company.

In May 2024, AIP asked to alter its shareholder agreement to increase its ownership stake from 16.4%. While the private equity firm’s ownership stake has risen to 18.8%, the number of shares held has remained the same. 

On Dec. 20, Titan filed a supplemental prospectus to allow for AIP to sell shares from time to time up to its 11.92 million shares held. That sounds like the conversation between Titan and AIP did not go well.

The shares AIP received from its sale of Carlstar were valued at $14.18. Since they’re down 37% since February 2024, they are unlikely to have sold any. 

AIP may wait until after the standstill agreement expires in June to buy more stock. This could get interesting.

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