These Hedge Funds Lost Their Shirts By Betting On Hertz Global Holdings, Inc. (HTZ)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Hertz Global Holdings, Inc. (NYSE:HTZ) based on that data.

Hertz Global Holdings, Inc. (NYSE:HTZ) shareholders have witnessed a decrease in hedge fund sentiment recently. Our calculations also showed that HTZ isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In today’s marketplace there are numerous methods shareholders can use to assess publicly traded companies. Two of the less known methods are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the elite fund managers can outperform the S&P 500 by a healthy margin (see the details here).

Carl Icahn

Carl Icahn of Icahn Capital LP

We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to review the recent hedge fund action regarding Hertz Global Holdings, Inc. (NYSE:HTZ).

What does smart money think about Hertz Global Holdings, Inc. (NYSE:HTZ)?

At the end of the first quarter, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -27% from the previous quarter. The graph below displays the number of hedge funds with bullish position in HTZ over the last 18 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Icahn Capital LP held the most valuable stake in Hertz Global Holdings, Inc. (NYSE:HTZ), which was worth $342 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $58.6 million worth of shares. GAMCO Investors, Lyrical Asset Management, and Nantahala Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Icahn Capital LP allocated the biggest weight to Hertz Global Holdings, Inc. (NYSE:HTZ), around 1.9% of its 13F portfolio. Lyrical Asset Management is also relatively very bullish on the stock, designating 0.6 percent of its 13F equity portfolio to HTZ.

Because Hertz Global Holdings, Inc. (NYSE:HTZ) has witnessed declining sentiment from the smart money, it’s easy to see that there exists a select few fund managers that elected to cut their full holdings by the end of the first quarter. Intriguingly, Paul Reeder and Edward Shapiro’s PAR Capital Management dumped the biggest stake of all the hedgies tracked by Insider Monkey, worth about $142.4 million in stock, and Clint Carlson’s Carlson Capital was right behind this move, as the fund dumped about $9.9 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 9 funds by the end of the first quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Hertz Global Holdings, Inc. (NYSE:HTZ) but similarly valued. These stocks are Suburban Propane Partners LP (NYSE:SPH), Piper Sandler Companies (NYSE:PIPR), Varex Imaging Corporation (NASDAQ:VREX), and Construction Partners, Inc. (NASDAQ:ROAD). This group of stocks’ market caps are similar to HTZ’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SPH 4 40581 -1
PIPR 12 30150 1
VREX 19 67850 0
ROAD 6 21553 -4
Average 10.25 40034 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.25 hedge funds with bullish positions and the average amount invested in these stocks was $40 million. That figure was $515 million in HTZ’s case. Varex Imaging Corporation (NASDAQ:VREX) is the most popular stock in this table. On the other hand Suburban Propane Partners LP (NYSE:SPH) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Hertz Global Holdings, Inc. (NYSE:HTZ) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. Unfortunately HTZ wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on HTZ were disappointed as the stock returned -59.2% during the second quarter (through June 10th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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Disclosure: None. This article was originally published at Insider Monkey.