Is Billionaire Mario Gabelli Plotting Shakeup Of Hertz Global Holdings, Inc (NYSE:HTZ)?

Hertz Global Holdings, Inc (NYSE:HTZ)

Hertz Global Holdings, Inc (NYSE:HTZ) reported feeble earnings results for both its 4Q2016 and full-year 2016. Financial performance in both periods was dragged by continued trouble in the company’s car-rental operation.

But as Hertz posted downbeat earnings results, Mario Gabelli, the billionaire founder of hedge fund Gamco Investors, disclosed an active stake of about 6.2% in the company. Gabelli’s disclosure of an active stake in Hertz suggests he could push for a shakeup of the company’s management.

Earnings results

Hertz posted adjusted EPS loss of $0.71 in 4Q2016, wider than $0.29 in the comparable quarter in the prior year. Revenue of $2.01 billion for the latest quarter was down 0.9% year-over-year. Analysts on the average were looking for adjusted EPS loss of $0.57 on revenue of $2.01 billion.

For full-year 2016, Hertz posted a loss of $491 million as revenue declined 2.4% to $8.8 billion.

Cash balance

Hertz Global Holdings, Inc (NYSE:HTZ) concluded 2016 with cash of $816 million, down from $1.43 billion in the prior quarter. But the company is carrying a heavy debt load as its debt stood at $13.54 billion at the end of the year, down slightly from $14.86 billion at the end of September quarter.

Asset write-downs

Hertz has struggled to prune costs to stabilize its operations. The company disclosed in the latest report that it wrote down the value of its Dollar Thrift business by about $120 million. It made a similar move in its European rental business where it wrote down the value of the operation by $172 million.

Leadership changes

Hertz Global Holdings, Inc (NYSE:HTZ) has been under three chief executives over the past few years. The current CEO, Kathryn Marinello, was hired in January. She said the disappointing 2016 results were caused by issues related to fleet and services, but promised that Hertz will continue to roll out new services to appeal to US customers as part of the efforts to grow revenue.

If Gabelli is interested in pushing for changes in Hertz, it is unclear what it is likely to focus on as the company only recently hired a new CEO. Perhaps Gabelli could attempt to reorganize Hertz’s board.

Carl Icahn is the largest shareholder in Hertz, and he has expressed confidence in Kathryn’s ability to turn around the company.

Stock movements

Shares of Hertz Global Holdings, Inc (NYSE:HTZ) rose 0.15% to $20 in the regulator session on Monday and continued to rise further by about 2% during after-hour trading. The stock is down more than 7% year-to-date and has retreated more than 97% over the last one year.

2/27/2017
Ticker Symbol HTZ
Last Price a/o, 4:02PM EST  $                         20.00
Average Volume (mlns) 2.19
Market Cap (blns)  $                  1.67
Sales (blns) $9.21
Shares Outstanding (mlns) 83.47
Share Float (mlns) 82.82
Shortable Yes
Optionable Yes
Inside Ownership 0.20%
Short Float 9.12%
Short Interest Ratio 3.45
Quarterly Return -23.55%
YTD Return -7.24%
Year Return

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.

Author: Monica Gray

Monica has an undergraduate degree in Accounting and an MBA she earned - with Honors. She has six years of experience in the financial markets and has been an analyst for the past two years.

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