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Hertz Global Holdings Inc. (NYSE: HTZ) has been an American business fixture since 1918, when Rent-a-Car Co. deployed a fleet of 12 or 13 Ford Model-Ts.
The COVID-19 pandemic may have been the classic "last nail in the coffin," but this company has been on the skids, losing money, for four years running. Over that time, it's been restructured six ways from next Tuesday, we've seen a rapid-fire succession of CEOs, and private equity firms have piled on debt with gusto, adding to its $19 billion debt load.
With travel – and its 700,000-vehicle fleet – at a standstill, Hertz was just out of time, money, and options. After paying out around $16 million in bonuses to executives, it laid off or furloughed around 16,000 workers.
Then, Hertz filed for Chapter 11 bankruptcy last week.
Now, usually, the magic word in a successful bankruptcy is "orderly." I mean, so long as things play out pretty much like the creditors and markets expect, companies can and often do come out of bankruptcy.
But even Hertz's bankruptcy could be chaotic.
A week into it, and there's still no credible restructuring plan. Hertz has told its landlords it won't be paying rent for at least six months. Clearly, Hertz is going to have to start unloading its fleet, but that could create even more pain for the U.S. auto industry, as it would probably pull the rug out from under used car prices.
Wow… How could it get any better?
Now, ordinarily, you'd think, "I'm not touching this stock with a 10-foot pole!" And from a buy and hold perspective, you'd be 100% correct. Billionaire investor Carl Icahn might agree…
Icahn backed Hertz to the hilt! Reuters is reporting he sank $1.88 billion into the stock over the past six years; he just sold his Hertz shares for a whopping $0.72, just about $40 million.
Icahn missed the move I'm about to show you – heck, I'd say 99% of investors did, too.
About the Author
Tom Gentile, options trading specialist for Money Map Press, is widely known as America's No. 1 Pattern Trader thanks to his nearly 30 years of experience spotting lucrative patterns in options trading. Tom has taught over 300,000 traders his option trading secrets in a variety of settings, including seminars and workshops. He's also a bestselling author of eight books and training courses.