As a new filing with the Securities and Exchange Commission showed, Barry Rosenstein‘s JANA Partners disclosed boosting its position in Hertz Global Holdings, Inc. (NYSE:HTZ). The fund reported acquiring 7.79 shares in open market transactions at an average price of approximately $23.76 apiece. Moreover, the investor purchased around 4.70 million shares through exercising options, paying $23 per unit. Following the transactions that took place between August 26 and October 17, JANA Partners owns some 32.05 million shares, including options to buy around 11.38 million shares. The activist stake held by the fund amasses 7.0% of Hertz.
Since the stake is activist by nature, JANA Partners said that it believes that Hertz Global Holdings, Inc. (NYSE:HTZ) is undervalued and the fund may engage in the future in discussions with the board of directors and the management of the company regading capital allocation, strategy and future plans. Barry Rosenstein first initiated a stake in Hertz Global Holdings, Inc. (NYSE:HTZ) during the first quarter of the year, initially holding 125,000 shares, and during the second quarter the position has been boosted to 5.92 million shares.
In the meantime the stock of Hertz Global Holdings, Inc. (NYSE:HTZ) fell by 25% year-to-date amid several issues the company faced with its financial statements. In May, the company identified several mistakes that have been made in its financial statements for the previous quarters. As you might remember, on the day of the announcement the stock fell by over 30%. However, this apparently was taken as an opportunity by some investors, such as Rosenstein and more importantly, Carl Icahn, who disclosed an 8.5% in August. Carl Icahn immediately went activist and demanded board seats, which have been offered to him in September.
Icahn’s activism did not limit only to board seats. Prior to nominating directors, Icahn, together with other shareholders, urged the board to remove the CEO, a request which has been satisfied and Mark P. Frissora stepped down and replaced with interim CEO Brian Patrick MacDonald.
Moreover, there have been speculations that Icahn buying a position in Hertz Global Holdings, Inc. (NYSE:HTZ), might lead to the company being put up for sale. However, even though Icahn is known for his kinf of aggresive style, a sale of the company while its accounting is still in trouble is very unlikely. With other activist investors becoming shareholders, a more possible scenario is for the company to undertake some drastic measures to improve its situation and increase its value. Nevertheless, the majority of analysts don’t seem to be very optimistic about the prospects of the company, with the Hertz stock having a ‘Hold’ consensus rating, although the average price target reaching $27, which is a significant premium.
Anyway, with Barry Rosenstein and Carl Icahn being among the shareholders, retail investors should watch Hertz Global Holdings, Inc. (NYSE:HTZ) more closely. JANA Partners is a notorious hedge fund with significant returns over the years, even though it has been affected by several sell-offs from the last several weeks. The fund has been hedging its investments lately. A couple of days ago, JANA sold its entire stake in QEP Resources Inc (NYSE:QEP), previously owning around 7% of the company. In addition, also recently, the fund increased its exposure to its largest holding, Walgreen Company (NYSE:WAG), currently holding 13.75 million shares. However, the largest stake, which amasses 14% of the equity portfolio is represented by ‘Put’ options in the SPDR S&P 500 ETF, which is a good strategy to hedge investments amid a volatile market.