Why Hedge Funds Are Betting on Hertz Global Holdings, Inc (HTZ)?

Although Hertz’s second quarter numbers were disappointing, there were some green shoots in the report. Hertz’s U.S. vehicle utilization rose 700 basis points versus that of the prior year due to stronger demand. Management remains focused on cutting costs, targeting $350 million in cost savings for 2016, and the company is confident it will achieve full-year free cash flow of $500-$600 million, up from the previous $400-$500 million due to lower spending. As the company pays down its debt and achieves its net leverage target of 3.5x by the end of the year, it will have more flexibility to buy back shares or to make acquisitions with its free cash flow for the coming years. Given that Hertz’s current free cash flow yield of over 13.7%, the company’s stock has substantial upside if the market gives more credit to its valuation due to those buybacks.

Overall, of the around 750 funds we track, 38 funds owned $1.97 billion worth of Hertz Global Holdings, Inc (NYSE:HTZ)’s stock, which accounted for 42.00% of the float on June 30, versus 47 funds and $1.79 billion respectively a quarter earlier. In terms of individual fund ownership, Larry Robbins‘ Glenview Capital owned around 11 million shares at the end of June, which amassed 2.5% of its equity portfolio. Jonathon Jacobson‘s Highfields Capital Management reported a stake of over 6.5 million shares in its latest 13F filing.

Disclosure: None