Carl Icahn Goes Activist on Hertz ~ market folly

Monday, August 25, 2014

Carl Icahn Goes Activist on Hertz

Activist investor Carl Icahn has filed a 13D on shares of Hertz Global Holdings (HTZ).  Per the filing, Icahn now owns 8.48% of the company with 38.8 million shares. 

This is a newly disclosed position for Icahn .  The filing was made due to activity on August 12th and it notes that Icahn intends to have discussions with management relating to "shareholder value, accounting issues, operational failures, underperformance relative to its peers and (their) lack of confidence in management."

Icahn was out buying HTZ shares in late June and sporadically throughout July.  He really ramped up his purchases in mid-August though and did a lot of buying on August 20th specifically.  This is the date that shares dropped from $31 to $28 on news of revised guidance.

Icahn primarily purchased call options and sold put options referencing an aggregate of over 35.97 million shares at June 2016 strikes.

HTZ is somewhat of a hedge fund hotel.  As of the end of the second quarter, HTZ's largest shareholders included:  Glenview Capital, SRS Investment Management, Fir Tree, York Capital, Highfields Capital, D.E. Shaw, JANA Partners, Third Point, and many more.  Just recently, Fir Tree urged the board to replace the Hertz CEO.

Per Google Finance, Hertz is "a holding company. The Hertz Corporation (Hertz) is its operating company and a direct wholly owned subsidiary of Hertz Investors, Inc., which is wholly owned by Hertz Holdings. Its business operates in two segments: rental and leasing of cars, crossovers and light trucks (car rental), and rental of industrial, construction and material handling equipment (equipment rental). In its equipment rental business segment, it rents equipment through approximately 340 branches in the United States, Canada, France, Spain, Italy, China and Saudi Arabia, as well as through its international licensees."

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