Tiger Global raises its position in Hertz Global Holdings
Highlights of Tiger Global Management’s 3Q14 positions (Part 10 of 12)
Tiger Global adds to stake in Hertz Global Holdings
Tiger Global raised its position in Hertz Global Holdings, Inc. (HTZ), which accounted for 5.34% of the fund’s third quarter portfolio. The fund owned 3,042,800 shares in HTZ at the end of the second quarter that increased to 15,851,100 shares at the end of the third quarter.
Hedge fund JANA Partners disclosed an activist position in Hertz via a 13D filing in October. Another activist investor, Carl Icahn, also increased his stake in Hertz to 10.77% from 8.48% via a 13D filing in November.
Overview of Hertz
Hertz Global Holdings operates its car rental business through the Hertz, Dollar Thrifty, and Firefly brands. The company has about 11,555 corporate and franchisee locations in North America, Europe, South America, Asia, Australia, Africa, the Middle East, and New Zealand. Hertz’s Dollar and Thrifty brands have roughly 1,400 corporate and franchisee locations in about 75 countries. The Firefly brand operates approximately 65 corporate and franchisee locations in seven countries.
Hertz has owned an equipment rental business since 1965. The company also owns Donlen Corporation, a fleet leasing and management business based in Northbrook, Illinois.
Hertz’s annual filing said revenues have seen a CAGR, or compound annual growth rate, of 6.9% over the last 20 years. The company has had YoY, or year-over-year growth in 17 of those 20 years. Here are some of Hertz’s competitors in the car rental space:
Avis Budget Group Inc. (CAR)
Enterprise Rent-A-Car
Uber
Hertz share price falls on accounting issues
Hertz’s shares declined in June 2014 due to certain accounting issues. That same month, Hertz said in an 8-K filing that the company will be restating three years of financials to fix about $46.3 million worth of errors in its 2011 statements. As a result, Hertz’s quarterly results announcements have been delayed. Hertz recently said it does not expect to complete its accounting activities and file updated financial statements before mid-2015.
Hertz names new CEO
After Mark Frissora resigned as Hertz’s chief executive in September, the company named Brian P. MacDonald as the interim CEO. In a November letter to Hertz, JANA Partners said it believes that “the CEO succession question currently facing the Board is of vital importance.” It was pushing for Dollar Thrifty CEO Scott Thompson as a CEO candidate.
Shares fell after the company named John Tague, former chief operating officer of United Airlines, as its chief executive officer. Icahn backed the hiring of Tague as the company’s CEO.
Hertz to adopt new strategy, cost reductions
Hertz announced a new fleet purchasing strategy to improve customer experience and the company’s competitive position. Hertz plans to purchase around 350,000 model-year 2015 vehicles in the US, which is approximately 60% more than the number of 2014 model-year vehicles bought. Hertz also said it will implement a global cost-reduction program to achieve run-rate cost savings of approximately $100 million by year end 2015.
The company recently announced its expansion in Europe and said it has opened more than 80 new locations in European cities this year.
Tiger Global’s top holdings traded in 3Q14
The fund added new positions in GoPro, Inc. (GPRO), Tableau Software Inc. (DATA), Mobileye NV (MBLY), and Bitauto Holdings Ltd (BITA). It sold positions in Dollar General Corp. (DG), Comcast Corp, (CMCSA), Fidelity National Information Services, Inc. (FIS), and Qihoo 360 Technology Co. (QIHU). Top position increases include Hertz Global Holdings Inc (HTZ), MasterCard Inc (MA), and Autohome (ATHM).
The next part of the series will highlight the fund’s position change in MasterCard, Inc.
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