|Bid||1.4700 x 27000|
|Ask||1.4900 x 28000|
|Day's Range||1.4300 - 1.5800|
|52 Week Range||0.4000 - 20.8500|
|Beta (5Y Monthly)||1.36|
|PE Ratio (TTM)||N/A|
|Earnings Date||Aug 04, 2020 - Aug 10, 2020|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||20.50|
Shares of Avis Budget Group (NASDAQ: CAR) soared 29% at the open on Thursday morning after receiving an upgrade from Morgan Stanley. Car sales are holding up better than feared during the pandemic, according to the analyst, and that is good news both for Avis Budget and its bankrupt rival Hertz Global Holdings (NYSE: HTZ). Avis Budget shares gave back some of those gains after the open, but were still up 19% as of 10:30 a.m. EDT.
On June 26th, Luckin Coffee (NASDAQ:LK) tumbled more than 50%. The company withdrew its request to make a case for continuing its listing on the Nasdaq. Luckin stock was pulverized, then suspended for trading on June 29th.Source: Keitma / Shutterstock.com It was not a good ending and certainly not the one that bulls were hoping to see. To be quite frank, I'm not sure what investors were looking for with this name. If they were going to pick over the scraps, they had to know it was pure speculation.To be fair, speculation can be completely fine -- so long as it is done in the right manner.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Speculation vs. InvestingBefore accounting issues were found, Luckin Coffee traded pretty well. Once the news was out though, many investors stepped aside. They have learned -- either the hard way or from others -- that accounting issues equals "no touch," and certainly not "go long." * 9 Florida Stocks to Avoid as Coronavirus Rates Spike We're in strange times, though. Bankruptcy stocks, like Chesapeake Energy (NYSE:CHK) and Hertz (NYSE:HTZ), have caught huge bids off the lows. While the rallies have been unsustained, one can see why some investors thought perhaps LK stock was worth holding.That's the difference between investing and speculating. Buying Hertz, Chesapeake or Luckin was buying into the hope that perhaps the stock would double, triple or become some sort of a multi-bagger.In other words, they are somewhat like call options. Meaning that they have the potential to go up several times the original investment, but they also have the potential -- and depending who you ask, the likelihood -- to go to zero.If done with low enough risk, speculation is fine. Because we have to remember these securities can become worthless and they can do so in the blink of an eye. As a result, risk management is virtually non-existent, with the exception of knowing that investors can wake up in the morning with these shares being worthless. Alternatives to LK Stock Click to EnlargeSource: Chart courtesy of StockCharts.comBack in May, I wrote the following on Luckin Coffee:"If I'm not long Luckin now, there's no way I'm buying this stock. Where there's smoke, there's fire. There's hundreds of quality stocks to own right now and one that just fell 80% on cooked books is not one of them."That's the simple truth, too. Of all of the great companies trading at a discount to where they were trading at the start of the year, why would investors go with a stock that just fell 80% on accounting issues?If coffee and China are the two ingredients one needs in their portfolio, why not consider Starbucks (NASDAQ:SBUX) instead? The company has a solid balance sheet, reputable and dependable management and steady growth.Well, it had steady growth before the novel coronavirus came around. By and large though, investors can count on this company. For starters, it's profitable, free cash flow positive and has sound financials.When it comes to 2020 though, the feeling is mixed. Analysts expect Starbucks to earn 90 cents per share this year. While good that it's expected to generate a profit, that result is down almost 70% vs. 2019's earnings results. The costs related to Covid-19 are building up, as revenue is forecast to fall just 12.5% this year.The U.S. is Starbucks' largest market, followed by China. The company committed to building hundreds of stores per year for several consecutive years in China, as the potential in this country was clear. It's why Luckin stock popped up out of nowhere, only to turn out to be a fraud.Starbucks could have a bumpy second half of 2020, but for the long term, this company will get it done for investors. In recent years, SBUX has made a larger commitment to the dividend and it shows. Shares now yield 2.23%, a generous payout compared to the 64 basis point yield of the 10-year Treasury bond.Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long SBUX stock. More From InvestorPlace * Why Everyone Is Investing in 5G All WRONG * America's 1 Stock Picker Reveals His Next 1,000% Winner * Revolutionary Tech Behind 5G Rollout Is Being Pioneered By This 1 Company * Radical New Battery Could Dismantle Oil Markets The post Luckin Stock Faces Delisting a Look Elsewhere to Invest appeared first on InvestorPlace.
Herc Holdings Inc. (NYSE: HRI) will host its second quarter and first half 2020 earnings call and webcast on Thursday, July 23, 2020, at 8:30 a.m. U.S. Eastern Time. The Company plans to issue a press release with the financial results on the same day prior to the call.
Here are the recent developments surrounding Hertz's wild bankruptcy, including today's stock-price bump.
(Bloomberg) -- Bankrupt Hertz Global Holdings Inc. and its bondholders are squaring off over how to shrink its nearly half-a-million vehicle fleet. Market watchers say the outcome could upend the multi-billion dollar lease-backed ABS industry.The cars are housed in an entity linked to Hertz’s asset-backed securities and leased to the rental giant. Normally, when a company with ABS files for bankruptcy, it must choose to confirm or reject the entire master lease tied to the debt. If it keeps the lease, it has to continue making payments on the vehicles as it offloads them piecemeal. If it walks away, all of the collateral is liquidated to pay back bondholders.Hertz wants a judge to allow it to convert the master lease into 494,000 separate agreements so it can reject the terms on 144,000 vehicles. That would allow Hertz to save roughly $80 million a month while it hangs onto the remainder of the cars as it seeks to emerge from bankruptcy a viable company. If the motion fails, Hertz may press for a reduction in payments to creditors, according to people familiar with the matter.The standoff raises the stakes in what is already 2020’s largest corporate bankruptcy. Hertz is seeking to avoid liquidation and strengthen its balance sheet via the restructuring, while bondholders with billions of dollars at risk who’d grown confident of their chances of being paid back are now threatened with losses. Moreover, industry insiders worry that if Hertz is successful in court, it would re-define the rules that have long governed the ABS market.“It’s going to be a real showdown,” said Philip Brendel, analyst with Bloomberg Intelligence. “Hertz is taking an aggressive posture, but if it rejects the master lease, it doesn’t have a fleet and this bankruptcy looks more like a liquidation.”Hertz almost certainly doesn’t want that to happen.Yet neither do its ABS creditors. For them, the best bet for maximizing the recovery on roughly $11 billion of bonds would be to have Hertz make lease payments on all the vehicles while it sells them gradually, using its industry connections to command top dollar.With that kind of leverage, Hertz may try to extend a 60-day postponement on its lease payments due to expire later this month. The company may also press bondholders to accept less going forward, said three of the people familiar with the matter who asked not to be identified discussing private negotiations.Still, bondholders may not be willing to give in so easily. A resurgent used-car market has strengthened their hand in recent months, making the threat of Hertz rejecting the master lease in its entirety less ominous. Used-vehicle prices in the first 15 days of June were up 6.6% over May and 4.4% above the same period in 2019, according to Manheim, the nation’s largest used-car auction.Hertz didn’t respond to a request seeking comment.ABS RiskBoth sides are now waiting to see what happens with Hertz’s court motion. A decision could come as soon as July 6.So are ABS industry experts, who say that if Hertz is allowed to reject some leases but not others, it could undermine the $25 billion market for rental-car related ABS, as well those for farm-equipment and construction-machinery financing, by making the bonds riskier. That could raise funding costs for borrowers and ultimately consumers, representatives for the Structured Finance Association argued in a proposed brief filed last week.“Granting Hertz’s motion would disrupt access to the capital markets for entire industries that depend on favorable financing terms provided via ABS structures -- and thus the national economy,” the group wrote.When credit graders and investors assess the risks of an ABS, they typically do so under the assumption that leases tied to all of the cars backing their bonds would be accepted or rejected during a bankruptcy.If Hertz is allowed to selectively reject leases, it effectively leaves bondholders with a different pool of collateral than they were expecting when they bought the securities. That could hamper their ability to be made whole by selling the cars backing the bonds, the thinking goes.“They have manufactured an assault on the securitization structure from which they raised tens of billions of dollars effectively secured by the master lease, in an effort to shift to the ABS lenders the hundreds of millions of dollars, or more, of economic cost from the depreciation on the vehicles,” lawyers representing ABS participants said in court papers.Hertz has dismissed the arguments about upending the structured-finance market as speculative and irrelevant, as have first and second-lien creditor groups.Thanks to the recovery in used-vehicle prices, many Hertz ABS investors have grown more confident they’ll get a full recovery on their bonds. Slices of ABS have rallied since the company filed for bankruptcy in May, with the portions of the securities that are first in line for repayment now trading near par. Junk-rated C slices of many Hertz deals, which are further back in line for repayment, have rallied 10 points or more since May to trade around 90 cents on the dollar.“This is gamesmanship,” Bloomberg Intelligence’s Brendel said. “It will be a constant negotiation. If the judge rules against Hertz, the company will say, ‘you took away my sword, now I’ll take out my club.’”The case is Hertz Corp. 20-11218, U.S. Bankruptcy Court, District of Delaware (Wilmington)(Updates to include additional markets affected in first and 12th paragraphs)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Two veteran Wall Street strategists favor using options hedges to tamp down risk as a blockbuster quarter draws to a close. Through Monday, the S&P 500 index had recovered 36% from its March 23 lows
The number of confirmed cases of the coronavirus illness COVID-19 topped 10 million around the world and the death toll surpassed a half million over the weekend, and Florida, South Carolina and Nevada all recorded their highest number of new infections in a single day.
(Bloomberg Opinion) -- Another volatile week in the U.S. equity market highlighted an inconvenient reality that investors have not yet fully grasped: Stocks now lack not just upward drivers but also anchors to maintain what has been an astonishing disconnect between elevated prices and challenged economic and corporate realities.The market has seemingly exhausted three potent drivers of returns — policy support, fundamentals and retail inflows — and investors are left searching for a new fuel for a market that is now missing not just momentum but also a stabilizer. Their hope is that the Federal Reserve will come to the rescue again with a new round of policy support. This “Fed put” has proved to be highly effective in the past in repressing volatility, enticing more risk-taking and attracting additional investment funds. The risk is that the central bank feels more compelled to wait for further signs of market stress before extending an already stretched, if not overstretched, policy response.A down week for the S&P 500 Index, which dropped 3%, has now taken returns for June into negative territory and exposed investors to considerable daily volatility. Dispersion among the top indexes remains evident, especially with the exhaustion of the rotation trade that for a short time favored many “reopening” stocks, especially those that had lagged badly. Consequently, the Nasdaq composite index is still up 3% for the month while the Dow Jones Industrial Average is down 1%. That divergence has produced a 9% gain for the Nasdaq so far this year but an 11% loss for the Dow and a 6% drop for the S&P 500.Behind these numbers are drivers — mostly sequential but also overlapping at times — that impressively pulled the main indexes from their lows on March 23 but started to run out of steam after June 8, when the Nasdaq hit a record and the S&P 500 briefly turned positive for 2020. Since then, the S&P 500 has lost 7%, the Dow 9% and the Nasdaq 2%. The first surge after March 23 was essentially led by extraordinary fiscal and monetary policy interventions, including previously unthinkable cash handouts and a remarkable expansion in the scale and scope of the Fed’s direct involvement in market pricing and functioning. While the vast majority of stocks benefited, the outperformance was concentrated among the “stay-at-home” companies, including Big Tech, which obviously favored Nasdaq.The second phase was led by corporate and economic fundamentals. High-frequency indicators of economic activity and associated corporate revenue generation shot up, turbocharging heavily downtrodden stocks such as airlines and, yes, even Hertz, the car-rental company in the midst of bankruptcy proceedings. The third and final phase was more technical. It was dominated by the greater involvement of retail investors, accentuated by the fear-of-missing-out (FOMO) influence that has been present awhile among institutional investors who had recently become more cautious.All three drivers now seem less effective and are, in the process, also robbing the stock market of anchors.A shockingly good jobs report for May diminished the urgency for more fiscal policy actions. Not only did it lead to a more divided Congress on what to do next, but it also risks the elimination of important household and corporate relief payments in the next few weeks. The Fed remains more worried about the outlook, but the astounding scale and scope of its previous interventions have come under growing criticism. In particular, there are concerns that by venturing into buying junk bonds, the segment of the credit market with high default risk, it has encouraged huge corporate debt issuance and even more excessive risk-taking by creditors and investors.Regarding fundamentals, the process of healthy reopenings has run into problems in a growing number of states, including Arizona, California, Florida, South Carolina and Texas. With both a record surge in cases and hospitalizations increasing, some local and state governments have opted in the last few days to halt and reverse reopenings. And even before that, the highest-frequency partial indicators of economic activity suggested that certain households were already pulling back from physical economic interactions. On the corporate side, Apple announced it was reclosing certain stores.All this has dampened the enthusiasm of retail investors who were instrumental in fueling the rotation into lagging stocks. With that, market outperformance reverted in the last couple of weeks to the narrower theme of “stay-at-home” stocks — and even that is likely to become even narrower as a growing segment of corporate America announces that it is suspending advertising on social media sites.Absent a new catalyst, markets that now lack both drivers and anchors are likely to languish in volatile and downward-trending trading. And with fundamentals unlikely to improve anytime soon given the spillovers between Covid-19 and the economy, investors will have to pin their hopes again on policies and, in particular, the reactivation of the Fed put. But with elevated asset prices already so disconnected from fundamentals, and with the divergence between Wall Street and Main Street attracting greater political and social attention and concern, it could well turn out that the Fed put is more out of the money than many investors assume.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Mohamed A. El-Erian is a Bloomberg Opinion columnist. He is the chief economic adviser at Allianz SE, the parent company of Pimco, where he served as CEO and co-CIO. He is president-elect of Queens' College, Cambridge, senior adviser at Gramercy and professor of practice at Wharton. His books include "The Only Game in Town" and "When Markets Collide." For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Estero, Florida-based vehicle rental company Hertz Global (NYSE:HTZ) is in the middle of bankruptcy proceedings. Hertz stock is currently hovering at $1.25, down from the $16-level of January 2020.Source: Eric Glenn/Shutterstock.com Analysts are wondering if markets have become over-speculative in the post-coronavirus world. The debate in part centers around the increased day trading activity in the shares of companies, such as Hertz, that are in effect bankrupt.Robintrack, which monitors interest in stocks held by Robinhood brokerage customers, has shown a surge in ownership in the stock in recent days. Therefore today, I'll take a closer look at the group and discuss whether the shares should belong in a long-term portfolio. At this point, it is important to remember that Hertz stock is unlikely to recover in the coming months.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Covid-19 Claims Corporate VictimsAccording to research by Meghan Busse and Jeroen Swinkels of Kellogg School of Management, Northwestern University, "The American car rental industry was born on August 20, 1916, when Josiah Ellis "Joe" Saunders, an entrepreneur living in Omaha, Nebraska, ran a seven-line classified ad offering "Automobiles for Hire." Saunders's fleet consisted of one vehicle--a Model T Ford--that he rented for ten cents per mile." * 10 Consumer Stocks to Buy to Ride the Post-Covid-19 Wave The car rental industry has experienced difficult downturns following the events of 9/11 as well as during the global financial crisis. But the coronavirus-lockdown and the ensuing economic contraction have become a major worldwide challenge for vehicle rental companies. The industry relies heavily on air travel as many customers rent vehicles at airports. As the level of business and leisure travel fell abruptly, so did car rentals.Thus Hertz Global has become one of the victims of the coronavirus economic difficulties. The 102-year-old group operates Hertz, Dollar and Thrifty vehicle rental brands in approximately 10,200 corporate and franchisee locations around the world. Initially management announced temporary closures of almost 600 locations.However, those measures were not enough and Hertz had to file for Chapter 11 bankruptcy proceedings in the second half of May. Chapter 11 will allow Hertz to operate while working out a plan to repay creditors. Its international operating regions including Europe, Australia and New Zealand were not included in those U.S. Chapter 11 proceedings.Veronique de Rugy and Todd Zywicki of George Mason University conclude that the current difficult environment "is driving debt-laden companies such as … Hertz into bankruptcy." As of the end of March, Hertz Global's debt burden had gone over $18 billion. In return, the group had only $1 billion of available cash. Bankruptcy Does Not Favor Investors in Hertz StockThe uncertain environment faced by car rental companies is highlighted by yet another recent Chapter 11 filing. In late May, Advantage Rent A Car, a former subsidiary of Hertz also went bankrupt.The U.S. Securities and Exchange Commission (SEC) clarifies what happens when a public company files for protection under the federal bankruptcy laws. It says "Bankruptcy laws determine the order of payment… Stockholders - owners of the company, have the last claim on assets and may not receive anything if the Secured and Unsecured Creditors' claims are not fully repaid."In other words, in the coming months, current investors in Hertz stock are unlikely to be left with any shareholder value.Prior to the bankruptcy announcement, Hertz stock was shy of $3. The next day, it was down to an intraday low of 40 cents, as would be expected.Yet the past month has seen some rather unusual trading activity in the shares. For example, on June 8, HTZ stock hit an intraday-high of $6.25. But as I write, it is around $1.25.InvestorPlace readers may remember that billionaire investor Carl Icahn used to be the largest shareholder in Hertz stock. On May 25, he sold his holdings, which represented a 39% stake in the car rental group, at an average per-share price of 72 cents.I cannot help but wonder why speculators are now coming to a Hertz stock when a professional like Icahn has decided to get out of it completely. After all, he lost close to $2 billion in his overall investment in the shares.Yet this kind of speculation around the recent bankrupt names has become somewhat of a weekly norm. Other names that day traders flock to include JCPenney (OTCMKTS:JCPNQ) and Whiting Petroleum (NYSE:WLL). The Bottom Line on Hertz StockInvesting in bankrupt names like Hertz stock in effect means wagering against a legal process that wipes out shareholders. For seasoned market participants, that would not be investing, but sheer reckless speculation. If you decide to play that daily game, it is important to appreciate the risks involved fully.Market participants see price spikes in any one of these bankrupt names quite regularly. However, long-term investors would be best served if they did not include any of them in their portfolios. If you are a rather risk-averse investor who wants to invest for the long run, broader markets offer plenty of solid companies.Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education, including a Ph.D. degree, in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation. As of this writing, Tezcan Gecgil did not hold a position in any of the aforementioned securities. More From InvestorPlace * Why Everyone Is Investing in 5G All WRONG * America's 1 Stock Picker Reveals His Next 1,000% Winner * Revolutionary Tech Behind 5G Rollout Is Being Pioneered By This 1 Company * Radical New Battery Could Dismantle Oil Markets The post Bankruptcy Makes Trading Hertz Stock a Pure Gamble appeared first on InvestorPlace.
Let’s just say it’s not looking good for car rental firm Hertz (HTZ). According to Morgan Stanley analyst Adam Jonas, hopes of a turnaround are, well, pretty close to zero.The analyst’s best-case scenario for Robinhood’s favorite bankrupt stock is a $3 price target (down from $8). The base case, however, is $0 (down from $2). This begs the question: what is the bear case? Jonas argues that even if lenders are willing to help Hertz out with a financial package, there are “concerns of material equity dilution.”Jonas explained, “As equity holders are at the bottom of the pecking order of the capital structure with over $18.8 billion of debt outstanding, (and up to $24 billion in total debt outstanding according to Hertz bankruptcy filing), we believe it is more likely than not, that equity will not carry a meaningful residual value as secured creditors will have first claim to cash or assets in the waterfall. Ultimately, given the binary nature of scenarios, our new base case reflects our view that our bear case has a higher probability of occurring than our bull case.”The wafer-thin chance that Jonas’ bull case scenario will play out rests on the possibility Hertz can secure financing. Even so, while a financial package would provide liquidity and enable Hertz to continue operating, the company will still need to work with creditors on satisfying its piles of debt, with it possibly reemerging as virtually a new company. This will result in current shareholders owning a completely worthless stock.Further hammering home the case for why Hertz is most likely heading to $0 is the very real possibility of a delisting from the New York Stock Exchange. Hertz has already received notice it will be delisted, a decision it has appealed. Given the way things stand, Jonas recommends a “wait and see approach,” as the risks remain firmly “skewed to the downside.”Accordingly, Jonas has removed his rating for Hertz. (To watch Jonas’ track record, click here)The view from the rest of the Street is hardly any rosier. Based on 4 Sells and 3 Holds, Hertz has a Moderate Sell consensus rating. Yet, for those ready to take a punt, there’s potential upside of 68%, should the $2.84 average price target be met over the next year. (See Hertz stock-price forecast on TipRanks)To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
(Bloomberg) -- Here we go again. A day after filing for bankruptcy protection, shares of GNC Holdings Inc. had their biggest gain in weeks.GNC jumped as much as 71% in New York on Thursday. That’s the biggest gain since June 8, with the beleaguered stock briefly trading for over $1 a share -- the highest in more than a week. It’s happening even though the company’s turnaround plan warns shareholders they’ll be wiped out.The move will likely remind investors of the bizarre trading this month in Hertz Global Holdings Inc. Its stock rose almost tenfold after the car renter filed for court protection, even though there’s little or no hope that shareholders will get anything when the case wraps up.Like Hertz, GNC is a popular stock among retail investors who use commission-free brokerages. Ownership of GNC shares in Robinhood users’ accounts has steadily increased since mid-March, according to data compiled by Robintrack.net.Analysts have speculated that novice traders who don’t understand how bankruptcy works are driving the recent rallies in Hertz and other bankrupt companies.Typically shareholders are the last to get a payout in a Chapter 11 bankruptcy, and that’s assuming that parties like lenders, lawyers and landlords get fully repaid.In GNC’s case, the company has already lined up a proposed buyer with an initial bid of $760 million. GNC’s largest shareholder, China-based Harbin Pharmaceutical Group Holding Co., and other potential co-investors made this initial “stalking-horse bid” that puts a floor on the price for a court-supervised sale process.Not EnoughAt that price, there won’t be enough to go around for everyone. Some junior creditors and equity holders will receive “no recovery on account of such existing equity interests and subordinated claims,” GNC said in court papers.Instead, the proceeds from a sale would go toward GNC’s secured lenders and pay off expenses such as overdue rent and bills from law firms and restructuring consultants.To be sure, a higher bid could emerge and pass muster with the court. If there’s any money left over, the excess cash could flow to unsecured creditors, and then perhaps to shareholders.But such outcomes are rare, and GNC’s efforts to find other buyers makes the prospect seem unlikely. The company met with 50 potential investors, according to court documents, but would-be U.S. rescue efforts were derailed by GNC’s debt load and the high cost of capital offered by lenders.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Hertz Global Holdings Inc.’s bonds were valued at 26.375 cents on the dollar in a credit derivatives auction Wednesday, casting doubt on the possibility that shares will have any value when the company emerges from bankruptcy.The price, determined in an auction that’s used to settle hundreds of millions of credit default swaps tied to the bankrupt company, means traders who bought protection against the car rental company’s failure will be paid 73.625 cents for every dollar insured.The relatively low bond recovery level suggests Hertz shareholders are likely to see their holdings go to zero as the company reorganizes in bankruptcy court. Hertz is among several bankrupt and near-bankrupt companies whose shares have surged amid a burst of interest from retail investors, even though equity is typically wiped out in Chapter 11 proceedings.Hertz shares at one point doubled early Wednesday after analysts at Jefferies wrote that firms like CarMax Inc. and AutoNation Inc. could be interested in purchasing Hertz’s roughly 150,000-car inventory. The stock closed at $1.61, up 30% from a day earlier. In a highly unusual move, Hertz attempted to sell new shares last week to raise cash and help pay off creditors before calling off the effort amid scrutiny from the Securities and Exchange Commission.Read more: Hertz killing share sale ends unusual bid to fund bankruptcyIn rare cases, it’s possible for a bankrupt company’s shares to have value, and recent developments like an increase in air travelers and a recovery in used car prices could help Hertz, according to Lehmann Livian Fridson Advisors Chief Investment Officer Martin Fridson.Traders had wagered a net $419 million of CDS on Hertz as of May 22, according to the International Swaps & Derivatives Association.(Updates with final auction results in first paragraph and closing share price in fourth.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Sales of roughly 150,000 of the company’s used cars—nearly one-third of its fleet—would raise about $3 billion in cash. But that $3 billion of cash wouldn’t go directly to Hertz’s operating company.
(Bloomberg) -- Hertz Global Holdings Inc. could flip its roughly 150,000-car inventory as it looks to stay afloat after filing for bankruptcy last month, according to analysts at Jefferies.Channel checks suggest used-car firms like CarMax Inc. and AutoNation Inc. could be among those eyeing Hertz in bankruptcy amid a rise in demand for used cars, analysts led by Hamzah Mazari and Bret Jordan wrote in a note to clients. The move could help ease some pressure for Hertz, as a sale of its used-car fleet would shore up some cash concerns and could fetch about $3 billion, the analysts said.Shares of Hertz, which have drawn particular interest from small-time investors, rallied as much as 32% on the speculation Wednesday. The bankrupt car renter’s stock surged roughly tenfold to top $5.50 a piece earlier this month, before sliding back toward record lows.Another less probable option for the company would be to see if car dealerships see value in Hertz’s more than 10,000 global branch locations, according to Jefferies. The picking off of storefronts and lots could boost the footprints for CarMax and AutoNation, which have hundreds of locations in the U.S.The longer it takes for Hertz to re-emerge from bankruptcy with a cleaner structure, the more opportunity there is for rivals to snag additional market share, the analysts said. With bankruptcies typically lasting between six months and two years, Jefferies expects Hertz’s path forward to be toward the longer end of that range.Hertz shares have cratered more than 90% from a February peak even with the recent attention from retail investors. The Estero, Florida-based company canceled an effort to raise cash by selling shares last week after U.S. regulators questioned its unusual attempt to pay off creditors.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Shares of Hertz Global Holdings Inc. shot up 20% in active trading Wednesday, putting them on track to snap a 4-day losing streak in which they plunged 38%, after Jefferies analyst Hamzah Mazari said his checks suggest that CarMax Inc. and AutoNation Inc. could be interested in the bankrupt car rental company. Trading volume was 18.8 million shares, making the stock the most actively traded on the NYSE. Meanwhile, CarMax's stock gained 0.3% while AutoNation shares fell 2.3%. Mazari said the most obvious way for auto dealers CarMax and AutoNation to "swoop in" would be to bid for 150,000 of Hertz's used cars, which are likely to be sold to pay off lenders, but also as Hertz looks to reduce its fleet given current demand and need to shore up cash. He believes a sale of 150,000 used cars could raise $3 billion. Separately, Mazari said he believes the $1 billion in liquidity Hertz had as of March 31 will have dwindled to about $365 million by June 30, which means the company needs debtor-in-possession financing of at least $900 million. "We think the longer [Hertz] takes to re-emerge from bankruptcy with a cleaner capital structure, the more opportunity there is for rivals to pick up share," Mazari wrote in a note to clients. Rival Avis Budget Group Inc.'s stock fell 4.5% in morning trading.
U.S. stocks opened firmly lower Wednesday morning, threatening to snap an eight-session win streak for the Nasdaq Composite, amid signs of rising coronavirus cases and worries about fresh international trade tensions. Those concerns have under cut enthusiasm for equities, which have already enjoyed a blistering rebound from their March lows. The Dow Jones Industrial Average was trading 222 points, or 0.8%, lower at 25,939, the S&P 500 index was off 0.6% at 3,113, while the Nasdaq Composite Index was off less than 0.1% at 10,104, after posting its second straight record close on Tuesday and its eight consecutive advance, widening a performance gap between the technology-laden index and broader market benchmarks. Reports of possible trade tensions between the U.S. and its European and North American allies, was drawing attention after, Bloomberg indicated that the Trump administration was considering imposing tariffs on an array of goods from Europe totaling some $3.1 billion as well as reimposing tariffs on aluminum imports from Canada. Meanwhile, New COVID-19 cases have jumped in several states, with Arizona, Texas and California reporting daily records of infections Tuesday. Signs of rising cases threatens efforts to restart economies that have been locked down to help limit the spread of the epidemic. Meanwhile, the International Monetary Fund on Wednesday lowered global growth expectations by 2 percentage points for this year to negative 4.9%. In corporate news, shares of Hertz Global Holdings Inc. were jumping on rumors that the troubled car-rental company may be purchased in bankruptcy.
In this article we will take a look at whether hedge funds think Herc Holdings Inc. (NYSE:HRI) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips […]
Volkswagen AG is in talks to acquire French car rental firm Europcar Mobility Group SA , in a deal that would allow the German car maker to better capitalize on its fleet, people familiar with the matter said on Tuesday. The acquisition would come as Europcar struggles to cope with the economic fallout of the COVID-19 pandemic, which has weighed on travel around the world and sapped demand for car rentals. It would represent a reversal for Volkswagen, which sold Europcar to investment firm Eurazeo SE in 2006.
(Bloomberg Opinion) -- It’s growing more likely by the day that we’ve reached peak “bored retail trader” in the financial markets.Bloomberg News, The Wall Street Journal and seemingly every financial news publication has now profiled Dave Portnoy, founder of the website Barstool Sports, who has turned to day-trading stocks with sports on hold because of the coronavirus pandemic. Robinhood Financial’s trading app is all the rage, being credited with the shocking rally in shares of bankrupt Hertz Global Holdings Inc. that almost prompted an unthinkable offering of potentially worthless stock. My Bloomberg Opinion colleague Matt Levine has called this entire phenomenon the “boredom markets hypothesis.” If this trend is close to running its course, more traditional investors might want to consider what happens when the music stops and Portnoy’s No. 1 rule — “stocks only go up” — doesn’t work so flawlessly. The S&P 500 Index’s sharp rally from its March lows is already starting to fizzle, with the index down more than 3% during the past two weeks. While hardly backbreaking, it’s the largest loss over such a sustained period since the worst of the selloff three months ago. Even sideways trading for the summer would violate the day trader’s mantra.Fortunately for sophisticated investors who might side with Warren Buffett and Leon Cooperman over the Robinhood crowd, there’s an intriguing asset class for this crossroads: convertible bonds.The securities, which can be swapped for shares at specified prices, have already been having something of a moment. The Bloomberg Barclays U.S. Convertibles Composite Total Return index jumped to a record on June 8 and remains close to that lofty level. Convertible bonds have gained 7.8% so far in 2020, better than the 5% return on investment-grade corporate bonds and the roughly 3% loss for the S&P 500. I’ve written before about how it seems as if there’s something inherently “cheap” about convertibles that boosts returns above and beyond a mix of stocks and bonds. Part of it might be the types of companies that offer such securities. Within the Bloomberg Barclays index, some of the biggest names include Tesla Inc., Carnival Corp., Southwest Airlines Co., Microchip Technology Inc. and Workday Inc. In other words, a combination of technology companies that have powered the U.S. stock market rally and brand-name businesses particularly harmed by the coronavirus but part of the “recovery trade” strategy. American Airlines Group Inc. is in the market selling convertible notes, too.Some of these individual companies are favorites of the new day-trading crowd. But for those who want to bet on convertible bonds, and specifically to keep trading relatively small sums with zero commission, the $4 trillion exchange-traded fund market is probably their best bet. Yet even the asset class’s sharp rally hasn’t been enough to lure individuals from the thrill of wagering on the trendy stock pick of the day. Consider the $717 million iShares Convertible Bond exchange-traded fund (ticker ICVT), which has soared since March and is up more than 6% this month alone. A few weeks ago, it looked as if it might have been discovered — on June 3, its assets increased by 21% as investors poured a net $108.3 million into the fund, the most since its inception roughly five years ago, according to data compiled by Bloomberg. It gained an additional $69 million on June 9, good for the second-biggest inflow ever. On the flip side, State Street’s $4.47 billion SPDR Bloomberg Barclays Convertible Securities ETF (ticker CWB) suffered an outflow of $107.6 million on June 10, the largest daily withdrawal on record, followed by a $75 million exodus on June 11. That’s a stark contrast to the tens of billions of dollars flowing into credit ETFs.That seeming lack of interest is just fine for investors like Eli Pars, co-chief investment officer and head of alternative strategies at Calamos Advisors. The Naperville, Illinois-based firm is the largest public holder of convertible bonds issued in April by Carnival and Southwest Airlines, according to data compiled by Bloomberg.“It’s a great way to play the stock market in a less volatile way,” he said in a phone interview. While this is the common elevator pitch for investing in convertibles, the securities backed up that claim during March’s turbulence by tumbling less than benchmark equity indexes. That’s because investors can always fall back on interest payments if equity prices fall while capitalizing on a rally because the value of the option to convert to shares increases as well.Pars says convertibles are compelling for those with significant equity holdings who want to dial back their risk a bit after the sharp rebound in the past three months, or for those who sat out the entire rally and want some protection from a reversal. It’s a safer bet than simply taking short positions on the S&P 500; Bloomberg News’s Cameron Crise calculated that speculators have ratcheted up their bets against the index to the most extreme level since 2011.In some ways, the new band of Robinhood traders plays right into the hands of investors like Pars. He manages the $9 billion Calamos Market Neutral Income Fund, which partly employs a strategy known as convertible arbitrage. The trade involves buying and holding the convertible bond while hedging with a short position in the common stock, in theory generating a nearly riskless profit from price discrepancies between the two assets. That’s more likely to happen when there’s added volatility — and especially when the fluctuations seemingly come out of nowhere. “It’s one thing when you have volatility driven by real fundamentals,” Pars says. “When you have more noise volatility, that’s perfect for an arb.”With so much uncertainty surrounding how quickly states can emerge from lockdowns, and just how quickly Americans will travel the way they used to, even modest downside protection, like the 1.25% interest rate on Southwest Airlines’s convertible securities, can be a comfort for investors. That could wind up being a better yield than similar maturity Treasuries over the next five years, given that it’s anyone’s guess whether the Federal Reserve will have raised short-term interest rates from near-zero by then.These are the prudent — albeit less entertaining — calculations that professional investors are paid to think about. There’s still a large divide between the newbie traders who fly in and out of stock and ETF positions on a whim thanks to no-fee trading, and Wall Street denizens who scrutinize market segments mostly out of reach of Robinhood. The former are best thought of like shares of Hertz, surging 682% in the span of days but now sputtering toward zero again.Convertible bonds, by contrast, have delivered average annual returns of 9% or higher over three-, five-, 10- and 15-year horizons. It stands to reason they’ll keep doing so long after the legions of bored traders find a new hobby.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- The rhetoric repeated frequently and loudly in the marketplace lately is that stocks “just want to go higher.” This highlights the leading role played by market technicals, or what I think of as determining the path of least resistance for risk appetites. Fueled most recently by the robust involvement of retail investors, these technicals first turbocharged a rally triggered both by corporate and economic fundamentals that were better than expected and consistently supportive monetary policies. Then they were instrumental in brushing off one new troubling question after another about these same fundamentals. Finally, they helped tip a stalemate between fundamentals and policies in favor of already-elevated stock valuations. But this is becoming a heavier burden, especially as more of a spotlight is placed on their dynamics.The three main U.S. stock indexes have rallied 39% to 45% from their lows on March 23. In the process, the S&P 500 is almost back to flat for the year (down 4%), outperforming the all-world index in the process. The Nasdaq has done a lot better, returning 11% year-to-date, while the Dow is down more than 9%.There have been several phases to the impressive stock market rebound from the March low.Slightly less negative health indicators — that is, a rate of worsening in Covid-19 illness that started to defy worst-case scenarios — and, initially more important, huge fiscal and monetary policy interventions, helped sharply reverse the typical liquidity-exaggerated slump that tends to take place when asset prices hit a sudden big air pocket. The upward move in prices was strengthened by additional Federal Reserve support that, in a surprising move, went as far as the once-unthinkable purchasing of junk bonds.The resulting spike attracted the attention and, more important, greater involvement of retail investors. They emphasized individual stocks that had notably lagged in the initial phases of the rally, a decision that was quickly validated by the boost given to “reopening” stocks powered by initial indications that the relaxation of the economic lockdowns in China and then Europe and the United States were proceeding in a healthy manner. Having endured economically devastating lockdowns to save lives, people were seeing it was possible to improve economic livelihoods while continuing to save lives. In this new “living with Covid” phase, stores were reopening and households were re-engaging in the economy while, simultaneously, rates of infection, hospitalization and death were all continuing to improve. Supported by a deep faith in the constant backing of central bank liquidity, the self-reinforcing upward price momentum that followed allowed stocks to overcome the next phase of less encouraging news. This included indications that the initial sharp recovery in economic activity was moderating, as was the improvement in health metrics. Meanwhile, a rise in corporate bankruptcies was making the ugly reality of permanent capital impairment more apparent for a subset of investors. In all this, the impact of retail investor flows also proved strong enough to offset what has become greater skepticism on the part of institutional and hedge fund investors.The underlying and evolving tug-of-war between more muted fundamentals and extremely supportive policies was in evidence last week. On the one side, the more uncertain outlook for corporate and economic fundamentals was illustrated by Apple’s decision to re-close stores in two states hit by rising Covid-19 hospitalizations and record daily infection numbers. On the other side, all four systemically important central banks — namely, the Fed, European Central Bank, Bank of England and Bank of Japan — continued to make statements and take actions that show a seemingly infinite willingness and ability to pump exceptional liquidity into the system despite growing concerns about excessive risk-taking by both debtors and investors, moral hazard, excessive decoupling of Wall Street from Main Street and other unintended adverse consequences.In the first part of last week, retail-led technicals were sufficient to resolve this tug-of-war in favor of even higher stock prices. Afterward, markets essentially stagnated, with rising intraday volatility posing more urgent questions as to whether the headwinds were starting to become more problematic.Such headwinds go beyond indications that China and the United States, first- and second-phase Covid countries, are slipping in their ability to decisively contain the initial virus shock. (China has decided to re-close schools and impose targeted lockdowns in Beijing, and some U.S. states are reporting elevated infection and hospitalization numbers.) They also involve U.S. economic data, such as last Thursday’s new and continuing jobless claims, which have switched from constituting upside surprises for markets to downside ones.With a lot more interest in how retail investors are allocating their money, including through increasingly analyzed Robinhood data, there is greater awareness not just of what has gone well, including articles about how retail has outperformed both institutional and hedge fund investing, but also what has gone badly, such as the experience with Hertz, the U.S. car-rental company. The influence of retail investors’ money is now experiencing what is familiar to long-distance runners who start with a sprint. The initial gains seem relatively easy and enormously satisfying, serving to build self-confidence. But as the realities of the longer distance gradually impose themselves, there is need for a second bout of energy to maintain the outperformance.The second bout of energy for retail investors can either come internally, from more money being redirected to stocks, or externally, from an improvement in fundamentals while policies remain supportive, or both. Absent that, this notable technical momentum will fade back into the pack, requiring ever more distortional policy support over time until fundamentals improve in a durable and inclusive fashion.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Mohamed A. El-Erian is a Bloomberg Opinion columnist. He is the chief economic adviser at Allianz SE, the parent company of Pimco, where he served as CEO and co-CIO. He is president-elect of Queens' College, Cambridge, senior adviser at Gramercy and professor of practice at Wharton. His books include "The Only Game in Town" and "When Markets Collide." For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The number of confirmed cases of the coronavirus illness COVID-19 in the U.S. rose above 2.2 million on Saturday, as Tulsa, Oklahoma geared up for President Donald Trump’s planned campaign rally.
‘Don’t confuse day traders with serious investors. Serious investing involves broad diversification, rebalancing, active tax management, avoiding market timing, staying the course, and the use of investment instruments such as ETFs with very low fees... Don’t be misled with false claims of easy profits from day trading.’ Malkiel, who wrote the widely read investment book, “A Random Walk Down Wall Street,” blamed a sudden surge of inexperienced traders on the new reality facing the younger generation.