Carl Icahn has an 8.48% stake (38,800,000 shares) in Hertz Global Holdings, Inc. (NYSE:HTZ) according to a just released 13D filing with the Securities and Exchange Commission, amounting to about $1.2 billion at yesterday’s closing price, calling the stock ‘undervalued’. News that Icahn is moving in looks to have saved Hertz from what would have been a terrible trading day after yesterday’s lowered guidance.
Carl Icahn’s filing saved what would have been a terrible day for Hertz
Hertz Global Holdings, Inc. (NYSE:HTZ) warned investors yesterday that its 2014 earnings would come in well below guidance both because of the huge number of recalls this year, mostly from GM, and because of soft demand for equipment rentals and ongoing challenges getting Dollar Thrifty Automotive Group, Inc. (OTCMKTS:DTGF) fully integrated with the rest of the company. Hertz stock tanked 12% in after hours trading, opening today at $27.55 compared to yesterday’s $31.56 close. A slew of analysts including Deutsche Bank’s Chris Woronka and J.P. Morgan’s Kevin Milota immediately lowered their ratings for Hertz, and those who held off expressed serious doubts about the company’s near term potential.
News that Carl Icahn has taken such a large position brought the stock back up to $30.33, still a 3.9% fall from yesterday’s closing price but not nearly as bad as the day started out.
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Hertz adopted a poison pill earlier this year to ward off Carl Icahn
Hertz Global Holdings, Inc. (NYSE:HTZ) management must be having mixed feelings about Icahn’s move today. Such a large, high profile investment surely gives their credibility a nice boost, but the last time Icahn reportedly took a large stake in the car rental company they instituted a poison pill at the 10% threshold to keep him at bay, though Icahn later said that he didn’t have a large position in Hertz.
While Carl Icahn may have used this morning’s market dip to enter the investment, it would be a mistake to think that he will be content to benefit from a small rebound. According to the SEC filing, Icahn has been building a position in Hertz since the end of June. Whatever else the activist investor has in mind we, and Hertz Global Holdings, Inc. (NYSE:HTZ) management, will probably find out soon.