Dmitry Balyasny Long Hertz: Invest For Kids Chicago Presentation ~ market folly

Monday, November 6, 2017

Dmitry Balyasny Long Hertz: Invest For Kids Chicago Presentation

We're posting up notes from the Invest For Kids Chicago Conference 2017.  Next up is
Dmitry Balyasny of Balyasny Asset Management who pitched a long of Hertz (HTZ).

Dmitry Balyasny's Invest For Kids Chicago Presentation: Long Hertz

First time back at the conference in eight years…when he pitched short Japanese government bonds because the 1.5% yield couldn’t go much lower.

Long Hertz (HTZ) – prior management mishandled the company; investors are overly worried about Uber/Lyft.  44% short interest creates big opportunity to be long if things are inflecting.  >5x leverage, previously losing money – many people scared off.

Uber/Lyft threat is overstated – only about 4% overlap.  Now an oligopoly industry – HTZ was the bad actor that over-expanded, dumping excess fleet inventory into the market at low prices; the fleet has now been restructured.  Used car prices may also be turning up.  Credit card data shows positive numbers in recent months.

HTZ is ½ leisure, ½ business – both doing well.  This was the last sloppy quarter, and we want to be long the most levered player as the cycle turns.  HTZ should be able to refi its high-cost debt.  Avis repurchases ~10% of its shares each year and HTZ should get there too.  The majority of their analysts create alpha within the first 3-6 months, and that could be the case here as shorts capitulate and real investors step up to buy the stock.

For more from this event, check out the rest of the presentations from Invest For Kids Chicago 2017.

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